The Changing Latitude: Labor‐Sponsored Venture Capital Corporations in Canada
研究了加拿大安大略省2005年税收政策变化后，劳工赞助风险投资公司（LSVCC）的投资组合变化，发现它们增加了对上市公司的投资（增长59.13%），减少了对私营公司的投资（下降13.17%），偏离了其支持高风险创业公司的原始使命。
Abstract Manuscript Type Empirical Research Question/Issue This paper seeks to understand the role corporate governance and government policy plays in the portfolio choices of the labor‐sponsored venture capital corporations ( LSVCC s) in C anada. We investigate whether or not the change in tax policy announced in O ntario (2005) had an impact on the investment behavior of Ontario LSVCC s and whether the unique corporate governance structure of LSVCC s enables them to focus on their investment mandate subsequent to this announcement. Research Findings/Insights Our findings suggest that LSVCC s in O ntario are more likely to include public companies in their fund portfolios after the announcement of the change in tax policy. We find that after 2005, LSVCC s have increased their number of investments in public companies by 59.13 percent and in turn decreased their number of investments in private companies by 13.17 percent. On the other hand, we find no significant changes in investment behavior for LSVCC s in other provinces. In terms of the percentage of total investment in public companies, we find that the LSVCC s in Ontario are more likely to increase their total investment in public companies by 50 percent and to decrease their investment in the short term by 46.43 percent. LSVCC s in other provinces, however, are reducing their percentage of investment in public companies by 58.33 percent and increasing their total investment in private entrepreneurial firms by 38.33 percent in the same period. Theoretical/Academic Implications With a hand‐collected proprietary dataset, we are able to augment existing studies on the unique structure of LSVCC s in C anada with empirical evidence on the style drift due to the changes in government tax policy. We compare and contrast the investment behavior of LSVCC s before and after the tax policy change in O ntario as well as the investment behavior of LSVCC s in other provinces. We hypothesize that as a result of the elimination of the tax credits, the removal of certain investment restrictions, and weaker corporate governance, LSVCC s have drifted from their original mandate to invest in high‐risk venture companies to investing in less risky public companies. Such style drift may be a result of LSVCC s preparing for potential wealth transfer or liquidation by retail investors. More importantly, we find the unique corporate governance structure of LSVCC s may facilitate this drift from their original purpose of providing venture capital to small and medium‐sized entrepreneurial ( SME ) firms. Practitioner/Policy Implications We highlight that the style drift of LSVCC s in O ntario may result in such funds behaving more like other types of mutual funds and the deviation from their original mandate to provide venture capital may not only prove detrimental to entrepreneurial investee firms seeking such capital, but also negate any diversification benefits sought by fund investors. Also, such deviation may not necessarily justify the higher management expense ratio charged by LSVCC s.