The market for angel capital – where individuals provide risk capital directly to small, private, often start-up firms – operates in almost total obscurity. Very little is known about the market's size, scope, the type of firms that raise angel capital, and the types of individuals that provide it. In this paper I present evidence on the angel market gathered from my field research which has involved interviews with more than a dozen angel investors in the Dallas/Fort Worth area. The angel market appears to be a very heterogeneous and localized market. With that qualification in mind, I present some common characteristics of the angels I interviewed, and how they select and monitor their investments. I pay particular attention to how they address adverse selection and moral hazard problems. I compare their behavior with venture capital limited partnerships in the more formal market for venture capital.

This paper examines the agency problem between shareholders and debtholders of Japanese and U.S. firms. Whereas U.S. institutional investors are restricted from doing so, Japanese financial institutions take large equity positions in firms to which they lend, particularly in firms more susceptible to the agency problem. Debt ratios of U.S. firms are negatively related to the firm's potential to engage in risky, suboptimal investments, whereas Japanese debt ratios show no such relation. The evidence is consistent with the notion that the agency problem is mitigated to a greater degree in Japan than in the U.S.

I examine the structure of corporate ownership in a sample of Japanese firms in the mid 1980s. Ownership is highly concentrated in Japan, with financial institutions by far the most important large shareholders. Ownership concentration in independent Japanese firms is positively related to the returns from exerting greater control over management. This is not the case in firms that are members of corporate groups (keiretsu). Ownership concentration and the accounting profit rate in both independent and keiretsu firms are unrelated. The results are consistent with the notion that there exist two distinct corporate governance systems in Japan —one among independent firms and the other among firms that are members of keiretsu.

ABSTRACT I examine the structure of corporate ownership in a sample of Japanese firms in the mid 1980s. Ownership is highly concentrated in Japan, with financial institutions by far the most important large shareholders. Ownership concentration in independent Japanese firms is positively related to the returns from exerting greater control over management. This is not the case in firms that are members of corporate groups (keiretsu). Ownership concentration and the accounting profit rate in both independent and keiretsu firms are unrelated. The results are consistent with the notion that there exist two distinct corporate governance systems in Japan —one among independent firms and the other among firms that are members of keiretsu.

The author examines the structure of corporate ownership in a sample of Japanese firms in the mid 1980s. Ownership is highly concentrated in Japan, with financial institutions by far the most important large shareholders. Ownership concentration in independent Japanese firms is positively related to the returns from exerting greater control over management. This is not the case in firms that are members of corporate groups (keiretsu). Ownership concentration and the accounting profit rate in both independent and keiretsu firms are unrelated. The results are consistent with the notion that there exist two distinct corporate governance systems in Japan–one among independent firms and the other among firms that are members of keiretsu.