Journal article
Is There a Trade-off Between Protecting Investors and Promoting Entrepreneurial Activity? Evidence from Angel Financing
Journal of financial and quantitative analysis, Vol.58(8), pp.3305-3341
12/2023
DOI: 10.1017/S0022109022001314
Abstract
This article studies how changes in investor protection regulations affect local entrepreneurial activity, relying on the heterogeneous impact of a 2011 SEC regulation change on the definition of accredited investors across U.S. cities. Using a difference-in-differences approach, I show that cities more affected by the regulation change experienced a significantly larger decrease in local angel financing, entrepreneurial activity, innovation output, employment, and sales. I find that small business loans and second-lien mortgages became entrepreneurs' partial substitutes for angel investment. My cost-benefit analysis suggests that the costs of protecting angel investors through the 2011 regulation change outweigh its benefits.
Details
- Title: Subtitle
- Is There a Trade-off Between Protecting Investors and Promoting Entrepreneurial Activity? Evidence from Angel Financing
- Creators
- Jiajie Xu - Univ Iowa Tippie, Coll Business, Iowa City, IA 52242 USA
- Resource Type
- Journal article
- Publication Details
- Journal of financial and quantitative analysis, Vol.58(8), pp.3305-3341
- DOI
- 10.1017/S0022109022001314
- ISSN
- 0022-1090
- eISSN
- 1756-6916
- Publisher
- Cambridge Univ Press
- Number of pages
- 37
- Language
- English
- Electronic publication date
- 11/17/2022
- Date published
- 12/2023
- Academic Unit
- Finance
- Record Identifier
- 9984380522502771
Metrics
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