Yifan (Freda) Fang

Research

Do Market Forces Reduce Carbon Leakage? Evidence from the U.S. Electric Utility Sector

Presentations: Rotman School of Management (2023), MFA Regular Session (2024), NFA PhD Session (2024), Rotman Sustainable Finance Research Roundtable (2025), EsFA (2025), Inaugural HKU Governance and Sustainability PhD Workshop (2025)

Abstract: I use the setting of U.S. power plant divestitures to test whether customer demand for green products affects a firm’s environmental performance. Leveraging divestitures from 2004 to 2020, I show that firms, on average, divest more carbon-intensive plants, and divested plants experience a 17% rise in total emissions post-transaction. However, this leakage effect is mitigated when plants face both heightened demand for low-carbon energy and competition. The demand channel is also reflected in prices: power producers operating in deregulated markets gain pricing power by selling renewable energy, with higher prices associated with stronger demand. Overall, my results suggest a potential role for green energy demand in improving power producers’ environmental performance.

Venture Fraud, with Alexander Dyck, Camille Hebert, and Ting Xu

Presentations: HEC Paris Entrepreneurship Workshop (2025), Rotman School of Management

Abstract: We assemble the first comprehensive sample of fraud cases in U.S. venture capital (VC)-backed startups to study venture fraud, a topic largely unexplored in finance. Using a sample of newly public firms involved in class action suits to align detection rate, we first show that VC-backed firms are more likely to commit fraud than non-VC-backed firms. This difference is particularly pronounced after 2010, coincident with a rise in founder-friendliness in the VC market. In a panel prediction model covering all venture fraud cases, including those identified from governmental agencies and legal sources, we find that proxies for agency frictions strongly predict fraud, while founder characteristics matter little. Fraud is more likely in startups with solo founders, strong founder control rights, and weak yet more convex founder cash flow rights. It also rises with coordination frictions among investors and the presence of non-traditional venture investors, but falls with investor reputation. Aggregate trends in founder-friendly funding conditions closely track the incidence of venture fraud. Fraudulent entrepreneurs continue to found new VC-backed firms unharmed relative to non-fraudulent entrepreneurs, suggesting a lack of market discipline. Overall, our results highlight increasing agency costs in VC-backed startups over time and suggest that a founder-friendly VC market can lead to capital misallocation. 

Silicon Valley Everywhere? Startup Accelerators and the Geography of Entrepreneurship, with Mohaddeseh Heydari Nejad (Draft Available Upon Request)

Presentations: Kelley School of Business (2025)

Abstract: Entrepreneurial entry is a primary driver of innovation and economic growth, and is shaped by a fundamental tradeoff: positive complementarities with the startup ecosystem and negative congestion effects from competition. This paper examines how this tradeoff shapes regional entrepreneurs’ entry decisions. We exploit the staggered rollout of the Creative Destruction Lab (CDL), a global accelerator targeting science- and technology-based ventures, that introduced 27 industry-specific streams across 10 cities between 2012 and 2022. To address endogenous site selection, we construct a novel instrument using OpenAlex data on academic connectivity to the CDL’s founding institution, the University of Toronto. We show causal evidence that CDL entry reallocates startup formation toward targeted industries with no aggregate capital expansion, leading to intensified competition for financing. Moreover, the entry response is immediate and short-lived, consistent with a belief-driven complementarities channel, where entry is driven by collectively shifted expectations about the regional industry’s viability, rather than changing fundamentals. Motivated by these patterns, we develop a structural model to decompose complementarities from competition effects in entrepreneurial entry decisions, and to evaluate optimal targeting strategies for innovation policy.