Research

Abstract: I study the effect of partisanship on venture capitalist (VC) investment. Specifically, I examine whether a VC’s investment decisions and the resulting outcomes are influenced when the VC general partners share the same political party affiliation as the startup founder or CEO. Results show that VCs exhibit a higher probability of investing in politically aligned startups on the extensive margin and, conditional on investing, commit larger capital and assign higher valuations on the intensive margin. I provide evidence that the partisanship effect in VC investment operates through an information-based mechanism rather than favoritism-induced behavioral bias, as startups aligned with their VC partners’ party affiliation exhibit superior exit outcomes and reduced failure probabilities.  

Abstract: I study how ESG mutual fund holding affects firms’ stock price informativeness. I utilize the change in methodology of MSCI ESG Leader Index as a quasi-exogenous shock in the level of ESG investor holdings. I show that after the treatment, stocks of firms excluded from the index are more informative about financial outcome and less informative about ESG outcome, compared with the control group. The predicting power of price for future variation in earnings increases while it decreases for CO2 emission. I show that the change in price informativeness is probably driven by traditional investors trading against ESG investors. 

With Siyi Song 

Abstract: This paper aims to examine to what extent venture capitalists are informed about the evolution of start-up value and how predictive ability differ across VCs. The main empirical challenge is the lack of data. Researchers do not observe all the data available at the time of decision-making, nor VC expectations that directly determines decision. We adopt a moment inequality approach to set identify model parameters. We found that predictive accuracy increases with experience and network depth, indicating a potential positive feedback loop when VCs jointly invest.