Prof. Thomas J. Chemmanur

Office: Fulton Hall 336

Phone: (617) 552 3980

E-mail: chemmanu@bc.edu

Lectures in Advanced Corporate and Entrepreneurial Finance

Course Descriptions

Course Objective: The objective of this course is to introduce Ph.D. students to current research issues and tools in corporate finance and financial intermediation, which will be of interest in their dissertation or other research. The course will be based primarily on research papers from theoretical and empirical corporate finance, and theoretical and empirical entrepreneurial finance.

Course Requirements: Since the objective of this course is to read and understand recent work in Corporate Finance (theory and empirical), participants (both presenters and non-presenters) are expected to spend adequate time giving careful attention to the assigned readings before coming to class. Many (probably most) of the lectures will be given by me. However, I may ask students to present some of the papers. Other than papers on which I choose to lecture, each paper will be presented by one participant nominated in advance for this purpose.

Presentation Format: Each presentation must adhere strictly to the following format: (1) Statement of the problem studied; (2) Brief survey of the literature; (3) Concise, intuitive, explanation of the argument producing the major results (for theory papers) or empirical methodology; (4) Summary of main results; (5) Critical examination of the paper; (6) Sketch of major extensions to the paper with specific suggestions about possible solution techniques (for theory) or empirical methodology/data for these extensions (students who can effectively accomplish the last point will get extra credit). Most important, each presentation must be both informative and entertaining.

Critique Format: Critiques must be between three to six pages in length (depending on the paper). The format of the critiques should be roughly along the following lines: (1) Statement of the problem studied; (2) Brief survey of the literature; (3) Concise, intuitive explanation of the argument producing the major results (for theory papers) or empirical methodology; (4) Summary of results; (5) Critical examination of the paper.

Office Hours: For brief discussions, you can meet with me right after class. Longer office hours can be scheduled by appointment (send me e-mail if you wish to make an appointment or wish to contact me for any other reason; I prefer e-mail).

Detailed Outline of Topics and Papers to be Discussed

The main papers that will be used in the discussion of each topic are listed below. Students are expected to read the review articles listed under each topic before they come to class. Review articles, articles by me (articles with **, on which I will lecture), and other papers with stars against them are NOT TO BE PRESENTED IN CLASS. In the following syllabus, each lecture will be two hours and fifteen minutes (consisting of three classes of 45 minutes each).

Topic One: Venture Capital, Angel Financing, Crowd Funding, and Peer to Peer Lending (Two Lectures)

REVIEW ARTICLE: Chemmanur, Thomas J. and Paolo Fulghieri, 2014. Entrepreneurial Finance and Innovation: An Introduction and Agenda for Future Research, Review of Financial Studies.

REVIEW ARTICLE: Da Rin, Marco, Thomas Hellmann, and Manju Puri, 2013. A Survey of Venture Capital Research, Handbook of the Economics of Finance (Chapter 8); Elsevier, BV, publishers.

**Chemmanur, Thomas J., Karthik Krishnan, and Debarshi K. Nandy, 2011. How Does Venture Capital Financing Improve Efficiency in Private Firms? A Look Beneath the Surface, Review of Financial Studies.

**Chemmanur, T., T. Hull, and K. Krishnan, 2016. Do Local and International Venture Capitalists Play well Together? A Study of International Venture Capital Investments, Journal of Business Venturing.

**Chemmanur, T.J. and Chen, Z., 2014. Venture capitalists versus angels: The dynamics of private firm financing contracts. The Review of Corporate Finance Studies, 3(1-2), pp.39-86.

Scott, John and Troy Scott, 2016. The Entrepreneur's Idea and Outside Finance: Theory and Evidence about Entrepreneurial Roles, European Economic Review (Theory paper).

Gompers, P.A., Gornall, W., Kaplan, S.N. and Strebulaev, I.A., 2020. How do venture capitalists make decisions?. Journal of Financial Economics.

Nanda, R., Samila, S. and Sorenson, O., 2020. The persistent effect of initial success: Evidence from venture capital. Journal of Financial Economics.

Bengtsson, O. and Sensoy, B.A., 2015. Changing the nexus: the evolution and renegotiation of venture capital contracts. Journal of Financial and Quantitative Analysis, 50(03), pp.349-375.

Bengtsson, O. and Sensoy, B.A., 2011. Investor abilities and financial contracting: Evidence from venture capital. Journal of Financial Intermediation, 20(4), pp.477-502.

Belleflamme, Paul, T. Lambert, A. Schwienbacher, 2013. Crowdfunding: Tapping the Right Crowd, Journal of Business Venturing.

Signori, A. and Vismara, S., 2016. Returns on investments in equity crowdfunding, unpublished working paper.

Xu, Ting., 2018, Learning from the Crowd: The Feedback Value of Crowd funding, unpublished working paper (Job Market Paper), University of British Columbia.

Balyuk, Tatyana, 2016, Financial innovation and borrowers: Evidence from peer-to-peer lending, unpublished working paper (Job market paper), Rotman School of Management, University of Toronto.

Balyuk, Tetyana, and S. Davydenko, 2016, Peer-to-peer lending, Working paper, Rotman School of Management, University of Toronto.

Tian, X., Udell, G.F. and Yu, X., 2016. Disciplining delegated monitors: When venture capitalists fail to prevent fraud by their IPO firms. Journal of Accounting and Economics, 61(2-3), pp.526-544.

Kaplan, S.N. and Strömberg, P., 2003. Financial contracting theory meets the real world: An empirical analysis of venture capital contracts. The Review of Economic Studies, 70(2), pp.281-315.

Lerner, J., Schoar, A. and Wongsunwai, W., 2007. Smart institutions, foolish choices: The limited partner performance puzzle. The Journal of Finance, 62(2), pp.731-764.

Robert M. Conroy and Robert S. Harris, 2007, How Good are Private Equity Returns?, Journal of Applied Corporate Finance, 19(3), pp. 96-108.

Topic Two: Corporate Innovation, Strategic Alliances, and Other Factors Affecting Corporate Innovation (Two Lectures)

REVIEW ARTICLE: Chemmanur, Thomas J. and Paolo Fulghieri, 2014. Entrepreneurial Finance and Innovation: An Introduction and Agenda for Future Research, Review of Financial Studies.

REVIEW ARTICLE: Hall, Bronwyn H. and Josh Lerner, 2010. The Financing of R&D and Innovation, Handbook of the Economics of Innovation.

**Manso, G., 2011. Motivating innovation. The Journal of Finance, 66 (5), pp.1823-1860.

**Chemmanur, Thomas J., Elena Loutskina and Xuan Tian, 2014. Corporate Venture Capital, Value Creation, and Innovation, Review of Financial Studies.

**Chemmanur, T.J. and Tian, X., 2018. Do antitakeover provisions spur corporate innovation? A regression discontinuity analysis. Journal of Financial and Quantitative Analysis, 53(3), pp.1163-1194.

**Chemmanur, Thomas J, Yao Shen, and Jing Xie, 2016. Innovation Beyond Firm Boundaries: Common Stockholders, Strategic Alliance, and Corporate Innovation, unpublished working paper, Boston College and Hong Kong Polytechnic University.

**Tian, Xuan and Tracy Yue Wang, 2014. Tolerance for Failure and Corporate Innovation, Review of Financial Studies.

**Chemmanur, T.J., Kong, L., Krishnan, K. and Yu, Q., 2019. Top management human capital, inventor mobility, and corporate innovation. Journal of Financial and Quantitative Analysis, 54 (6), pp.2383-2422.

Balsmeier, B., Fleming, L. and Manso, G., 2016. Independent boards and innovation. Journal of Financial Economics.

Bernstein, S., Giroud, X. and Townsend, R.R., 2015. The impact of venture capital monitoring. The Journal of Finance.

Seru, A., 2014. Firm boundaries matter: Evidence from conglomerates and R&D activity. Journal of Financial Economics, 111(2), pp.381-405.

Robinson, D.T., 2008. Strategic alliances and the boundaries of the firm. Review of Financial Studies, 21(2), pp.649-681.

Ozmel, U., Robinson, D.T. and Stuart, T.E., 2013. Strategic alliances, venture capital, and exit decisions in early stage high-tech firms. Journal of Financial Economics, 107(3), pp.655-670.

Ma, S., 2019. The life cycle of corporate venture capital. Review of Financial Studies.

Chemmanur, T., Gupta, M., and Simonyan, K., 2019. Management Quality and Innovation in Private Firms and the IPO Market Rewards to Innovative Activity. Forthcoming, Entrepreneurship Theory and Practice.

Topic Three: Initial Public Offerings, the Going Public Decision, and the Declining Number of IPOs in the U.S. and Around the World (One Lecture)

REVIEW ARTICLE: Ritter, Jay R. and Ivo Welch, 2002. A Review of IPO Activity, Pricing, and Allocations, The Journal of Finance.

SURVEY ARTICLE OF IPO PRACTICE: Brau, J. C., and S. E. Fawcett, 2006. Initial Public Offerings: An Analysis of Theory and Practice, The Journal of Finance.

**Rock, K., 1986. Why new issues are underpriced. Journal of Financial Economics, 15(1-2), pp.187-212.

**Benveniste, L.M. and Spindt, P.A., 1989. How investment bankers determine the offer price and allocation of new issues. Journal of Financial Economics, 24(2), pp.343-361.

**Chemmanur, T.J., 1993. The pricing of initial public offerings: A dynamic model with information production. The Journal of Finance, 48(1), pp.285-304.

**Chemmanur and Fulgieri, RFS, 1999. A Theory of the Going Public Decision, Review of Financial Studies.

**Chemmanur, He, and Nandy, 2009. The Going Public Decision and the Product Market, Review of Financial Studies.

**Bayar, O. and Chemmanur, T.J., 2011. IPOs versus acquisitions and the valuation premium puzzle: a theory of exit choice by entrepreneurs and venture capitalists. Journal of Financial and Quantitative Analysis, 46(6), pp.1755-1793.

**Chemmanur, T.J., He, J., He, S. and Nandy, D., 2018. Product market characteristics and the choice between IPOs and acquisitions. Journal of Financial and Quantitative Analysis, 53(2), pp.681-721.

**Chemmanur, T.J. and He, J., 2011. IPO waves, product market competition, and the going public decision: Theory and evidence. Journal of Financial Economics, 101(2), pp.382-412.

**Chemmanur, Thomas J., Gang Hu, and Jiekun Huang, 2010. The Role of Institutional Investors in Initial Public Offerings, Review of Financial Studies.

Gao, X., Ritter, J.R. and Zhu, Z., 2013. Where have all the IPOs gone?. Journal of Financial and Quantitative Analysis, 48(06), pp.1663-1692.

Ritter, J, 1991. The Long-Run Performance of Initial Public Offerings. The Journal of Finance.

Chemmanur, Thomas J., Pengfei Ma, Chaopeng Wu, and Qianqian Yu 2018, Information Production by Institutions and Information Extraction by Underwriters in Hybrid IPO Auctions ,Working Paper..

Doidge, C., A. Karolyi, and R. Stulz, 2013. The U.S. left behind? Financial globalization and the rise of IPOs outside the U.S., Journal of Financial Economics.

Chaplinsky, S., Hanley, K.W. and Moon, S.K., 2017. The JOBS Act and the costs of going public. Journal of Accounting Research, 55(4), pp.795-836.

Dambra, M., L. Field, and M. T.. Gustafson, 2015. The JOBS Act and IPO volume: Evidence that Disclosure Costs affect the IPO decision, Journal of Financial Economics.

Topic Four: Product Market Advertising, Attention and Media Coverage, and Social Networks: Effects on Initial Public Offerings and Private Investors (One Lecture)

REVIEW ARTICLE on Social Networks: Allen, F, and Babus, 2009. Networks in Finance, published in The Network Challenge, edited by Paul Kleindorfer and Jerry Wind, Wharton School Publishing.

**Merton, Robert, 1987. A Simple Model of Capital Market Equilibrium with Incomplete Information, The Journal of Finance.

**Chemmanur, Thomas and An Yan, 2009. Product Market Advertising and New Equity issues, Journal of Financial Economics.

**Chemmanur, T. and Yan, A., 2017. Product market advertising, heterogeneous beliefs, and the long-run performance of initial public offerings. Journal of Corporate Finance, 46, pp.1-24.

**Chemmanur, T.J. and Yan, A., 2019. Advertising, attention, and stock returns. Quarterly Journal of Finance.

**Chemmanur, Thomas, Karthik Krishnan, Qianqian Yu, 2018. Venture Capital Backing, Investor Attention, and Initial Public Offerings, unpublished working paper, Boston College.

**Lou, Dong, 2014. Attracting Investor Attention through Advertising, Review of Financial Studies.

**Bajo, T. Chemmanur, K. Simonyan, and H. Tehranian, 2016. Underwriter Networks, Investor Attention, and Initial Public Offerings, Journal of Financial Economics.

**Jackson, M. O., and B. W. Rogers, 2007. Meeting Strangers and Friends of Friends: How Random are Social Networks?, American Economic Review.

Fang, Lily, and Joel Peress, 2009. Media Coverage and the Cross-section of Stock Prices, The Journal of Finance.

Engleberg, J E and Christopher Parsons, 2011. The Causal Impact of Media in the Financial Markets, The Journal of Finance.

Dyck, A., N. Volchkova and L. Zingales, 2008. The Corporate Governance Role of the Media: Evidence from Russia, The Journal of Finance.

Hochberg, Y., A. Ljungqvist, and Y. Liu, 2007. Whom You Know Matters: Venture Capital Networks and Investment Performance, The Journal of Finance.

Kuhnen, C., 2009. Business Networks, Corporate Governance, and Contracting in the Mutual Fund Industry, The Journal of Finance.

Cohen, L., A. Frazzini, and C. Malloy, 2010. Sell side School Ties, The Journal of Finance.