Upcoming conferences and seminars

NFA, UT Dallas Finance Conference, Texas Finance Festival, London School of Economics, AFA

Publications

• Individualism During Crises, with Bo Bian, Jingjing Li, and Natasha Z. Foutz. Review of Economics and Statistics, forthcoming

INFORMS CIST 2020 Best Paper Award. Coverage: Marginal Revolution, UVA Today, Insights at Sauder. [replication package]

• Does Career Risk Deter Potential Entrepreneurs? (NBER WP No. 22446), with Joshua Gottlieb and Richard Townsend. Review of Financial Studies, forthcoming

Coverage: BBC, NRP, Bloomberg, Ozy, Politico, Equitable Growth, SIEPR Policy Brief, Darden Ideas to Action.

• Do Excess Control Rights Benefit Creditors? Evidence from Dual-Class Firms. Journal of Financial and Quantitative Analysis, 2021

• Board Gender Diversity and Corporate Innovation, with Dale Griffin and Kai Li. Journal of Financial and Quantitative Analysis, 2020

• Competition and Ownership Structure of Closely-Held Firms, with Jan Bena. Review of Financial Studies, 2017

Working Papers

• Investor Tax Credits and Entrepreneurship: Evidence from U.S. States (NBER WP No. 27751), with Matthew Denes, Sabrina Howell, Filippo Mezzanotti, and Xinxin Wang. (Subsume Denes, Wang, and Xu (2019) and Howell and Mezzanotti (2019) ). Revise & resubmit, Journal of Finance

Best Paper Award Mid-Atlantic Research Conference in Finance 2020 . Coverage: KelloggInsight, Darden Ideas to Action, UCLA Anderson Review

Conferences: NBER Business Taxation, AFA, Red Rock, WFA, ASU Sonoran, Jackson Hole Finance Conference, Southern California PE Conference, Duke/UNC Innovation and Entrepreneurship Research Symposium, HEC Paris Entrepreneurship Workshop, Young Scholars Finance Consortium, MFA, Finance in the Cloud II, FIRS, Northeastern Finance Conference, Mid-Atlantic Research Conference in Finance, 3rd Junior Entrepreneurial Finance and Innovation Workshop

Angel investor tax credits are used globally to spur high-growth entrepreneurship. Exploiting the staggered implementation of these tax credits in 31 U.S. states, we find that while they increase angel investment, they have no significant effect on entrepreneurial activity. Tax credits induce entry by inexperienced, local investors and are often used by insiders. A survey of 1,411 angel investors suggests that a “home run” investing approach alongside coordination and information frictions explain low take-up among experienced investors. The results contrast with evidence that direct subsidies to firms have large positive effects, raising concerns about using investor subsidies to promote entrepreneurship.

• Flight to Safety: How Economic Downturns Affect Talent Flows to Startups (NBER WP No. 27907), with Shai Bernstein and Richard Townsend (NBER Video; NBER Bulletin on Entrepreneurship) Invited for submission to Review of Financial Studies (dual submission process)

Conferences: NBER Entrepreneurship, RCFS Conference, SFS Cavalcade, MFA. Coverage: MarketWatch, NPR, dot.LA, Challenges, HBS Working Knowledge, Darden Ideas to Action

Using proprietary data from AngelList Talent, we study how individuals’ job search and application behavior changed during the COVID-19 downturn. We find that job seekers shifted their searches toward more established firms and away from early-stage startups, even within the same individual over time. Simultaneously, they broadened their other search parameters. Relative to more established firms, early-stage startups experienced a decline in applications, primarily driven by higher-quality candidates. These declines hold within a firm as well as within a job posting over time. Our findings uncover a flight to safety channel in the labor market, which may amplify the pro-cyclical nature of entrepreneurial activities.

• Regulatory Costs of Being Public: Evidence from Bunching Estimation (NBER WP No. 29143), with Michael Ewens and Kairong Xiao [Public float and 10-K(SB) part length data]

Best Paper Award CICF 2021. Presentations: UTD Finance Conference, Texas Finance Festival, AFA, CICF, Securities and Exchange Commission. Coverage: Columbia Law School Blue Sky Blog.

The increased burden of disclosure and governance regulations is often cited as a key reason for the significant decline in the number of publicly-listed companies in the U.S. We explore the connection between regulatory costs and the number of listed firms by exploiting a regulatory quirk: many rules trigger when a firm's public float exceeds a threshold. Consistent with firms seeking to avoid costly regulation, we document significant bunching around multiple regulatory thresholds introduced from 1992 to 2012. We present a revealed preference estimation strategy that uses this behavior to quantify regulatory costs. Our estimates show that various disclosure and internal governance rules lead to a total compliance cost of 4.3% of the market capitalization for a median U.S. public firm. Regulatory costs have a greater impact on private firms' IPO decisions than on public firms' going private decisions. However, heightened regulatory costs only explain a small fraction of the decline in the number of public firms.

• Cross-Border Institutions and the Globalization of Innovation, with Bo Bian and Jean-Marie Meier

Conferences: SFS Cavalcade, 13th Annual Northwestern Conference on Innovation Economics, EFA, FIRS, MFA, NFA, CICF, Pacific Northwest Finance Conference, 3rd Junior Entrepreneurial Finance and Innovation Workshop. Coverage: Darden Ideas to Action

We identify strong cross-border institutions as a driver for the globalization of innovation. Using 67 million patents from over 100 patent offices, we introduce novel measures of innovation diffusion and collaboration. Exploiting staggered bilateral investment treaties as shocks to cross-border property rights and contract enforcement, we show that signatory countries increase technology adoption and sourcing from each other; they also increase R&D collaborations. These interactions result in technological convergence. The effects are particularly strong for process innovation, and for countries that are technological laggards or have weak domestic institutions. Increased innovation contracting and exchange of capital are the key channels.

• Learning from the Crowd: The Feedback Value of Crowdfunding

Conferences: AFA, EFA, USC CETAFE, IZA/Kauffman Entrepreneurship Workshop. Summary in Darden Ideas to Action

Can crowdfunding benefit entrepreneurs beyond providing finance? This paper shows that crowdfunding extends early feedback to entrepreneurs about the market demand for their projects, thereby mitigating uncertainty associated with entry. Using Kickstarter data and exploiting a weather-based instrument, I show that more positive feedback (i.e., more initial pledging) from the crowd increases entrepreneurs’ chances to continue and commercialize their projects. The effects are stronger when entrepreneurs face higher uncertainty or when the crowd is more experienced. Consistent with crowdfunding feedback containing real option value, entrepreneurs launch riskier projects when the opportunity cost of crowdfunding increases. A survey of Kickstarter entrepreneurs corroborates these results.