Entrepreneurial Finance, Innovation, Private Equity, Corporate Social Responsibility, M&A.
Crowdfunding as Gambling: Evidence from Repeated Natural Experiments (with Ali Mohammadi & Kourosh Shafi) R&R at Journal of Corporate Finance.
Abstract: We explore whether sensation-seeking, a personality trait that involves risk-taking for novelty and thrill, is one of the underlying motivations for participating in peer-to-peer lending crowdfunding markets. To empirically substantiate this argument, we test whether individuals participating in Prosper, one of the largest lending markets in the U.S., reduce their lending activity when gambling in the form of playing the multistate lotteries Powerball and Mega Millions becomes more attractive. Lottery is a repeated natural experiment: lottery jackpots are randomly won and a series of draws with no winners form large jackpots. We find that the thrill of winning a large jackpot lottery, perhaps intensified by advertising and media coverage around this event, fulfills some lenders’ desire of sensation-seeking and substitutes participating in Prosper, decreasing their lending activity. We discuss implications for lenders and borrowers, as well as platform organizers and policy makers.
Abstract: A growing literature documents that management quality accounts for an important portion of the differences in productivity across firms and countries. One route through which management practices could affect productivity is through mergers and acquisitions. In this paper, I investigate the role of management quality on cross-border acquisition activities and outcomes. I find that cross-border deal volume is positively associated with management quality differences across countries and firms. Firms with better management practices are more likely to be the acquirers. Acquisition premia paid to the target are positively related to the difference in management quality between the acquirer and target firms. Managers of the target firm are more likely to quit when the acquiring firm has better management practices. Lastly, target firms are less likely to be divested post-acquisition when acquirer firms have better management practices. My results indicate that management as a strategic intangible asset plays an important role in the cross-border acquisition plans, activities and outcomes.
Going Private and Innovation (with Ali Mohammadi)
Abstract: In this paper, we investigate how going private affects corporate innovation activities. We compare the innovation activities of firms that went private to the innovation activities of firms that received a going-private offer but stayed as public for reasons unrelated to innovation. Using patent-based metrics, we find that the scale of innovation grows after going private. The most important innovations after going private have higher quality relative to the most important innovations before going private. Firms that go private also produce more influential patents in the following years after going private. In line with the predictions of agency theories, our results suggest that going private has a significant positive impact on the innovative performance of listed firms. We also find that, in public-to-private transactions, being acquired by a private equity (PE) firm does not bring an additional performance boost in terms of innovation in comparison to being acquired by a non-PE firm.
Work in Progress
- “Organizational Restructuring of the Buyout Targets” (with Gustav Martinsson and Per Strömberg)
- “Private Equity, Productivity, and Industry Structure” (with Per Strömberg)
- “Strategic Value of Patents for Venture Capital Investments”
- “Behavioral Reactions of Consumers to Economic Shocks” (with Aziz Simsir)
- “Corporate ESG Policies and Political Ties” (with Bunyamin Onal)