Yi (Elaine) Liu

Abstract: While traditional venture capital (TVC) has been shown to play a central role in fostering high-growth young firms, a quarter of U.S. venture capital investments are made by non-financial firms via corporate venture capital (CVC). Unlike TVC, which represents financial intermediation, CVC entails a match between business entities that may be linked in the production and technology networks. This paper addresses the role of CVC in fostering innovation and growth at private young firms. To deal with endogenous CVC investments, a shift-share instrument is constructed at the industry level by using the initial investment shares of different CVC funders and idiosyncratic shocks to the supply of funder capital. The estimates reveal a significant and positive effect of CVC on young firm patenting outcomes and successful exits through an initial public offering. A stylized endogenous growth model then formalizes the environment, hypothesizing demand and/or technology synergies as potential mechanisms underlying the positive effect of CVC. Using production network data, I find that the effect of CVC is stronger when the CVC funding industries are located in more downstream positions vis-a-vis the funded industry, lending support to the demand channel of CVC. There is no significant relationship when testing the technology channel of CVC using the patent citation network.

Abstract: Corporate venture capital (CVC) accounts for a large share of total U.S. venture capital investments. This paper evaluates the implications of CVC for aggregate economic outcomes. I develop a growth model featuring CVC and endogenous firm innovation that is consistent with a set of facts on U.S. CVC, including (i) the selection of large and highly innovative firms into making CVC investment and (ii) positive treatment effects associated with CVC on both the funded and funding firms in innovation outcomes. In equilibrium, firms engaged in CVC benefit from the positive treatment that makes them innovate more, whereas the rest of the firms reduce innovation as they face more intense competition. These forces in turn affect firm selection and the incentives for new entrepreneurship. Quantitative analysis suggests that a higher level of CVC activity leads to an overall increase in aggregate growth, a fall in entry, and a fattening of the firm size distribution at both tails. 

Abstract: We employ a large, representative firm-level dataset to study the evolution of financial health at Greek non-financial corporations following the COVID-19 pandemic, using a dynamic panel framework.