I propose that the nonfinancial component of financial firms' assets, in particular the growth opportunities associated with business operations, drives most of the variation in their equity valuation. I document this fact for a large class of intermediaries: life insurance companies. In particular, I decompose insurers' market equity returns into net financial asset returns and net business asset returns and show that these two components have very different risk exposures and are negatively correlated outside of the 2008-2009 financial crisis. The variation in life insurers' net business asset returns drives 81% of the aggregate time series variation and 100% of the cross-sectional variation in their market equity returns. For this reason, the current intense regulation on life insurers' net financial assets may be insufficient as a great deal of risk is derived from their net business assets which are comparatively under-regulated.

Capital reallocation is procyclical, despite measured productive reallocative opportunities being acyclical, or even countercyclical. This paper reviews the advances in the literature studying the causes and consequences of capital reallocation (or lack thereof). We provide a comprehensive set of capital reallocation stylized facts for the US, and an illustrative model of capital reallocation in equilibrium. We relate capital reallocation to the broader literatures on business cycles with financial frictions, and on resource misallocation and aggregate productivity. Finally, we provide directions for future research.

In this project, we study the wealth dynamics of founders who took their firms public, whom we denote ``Superstar Founders''. We document how the fortunes of Superstar Founders were created. Like the overall US wealth distribution, the right tail of the firm-founder wealth distribution is fat-tailed. However, the cutoff for the top 1\% of US wealth is in the millions, while for Superstar Founders it is in the billions. We decompose founder wealth into wealth created at the time of their firms' initial public offerings (IPOs), and the subsequent wealth obtained from shares held longer into firms' life cycles. Not surprisingly, the ultimate distribution of superstar founder wealth is more disperse than their wealth at IPO. Indeed, about half of founders lose wealth from holding onto shares in their firm vs.~investing a corresponding amount in the overall stock market, while the wealth of founders whose firms grow the most form a very thick right tail. We simulate a model of the IPO size and ownership distributions, founders' selling rules, and firm-value dynamics to study counterfactuals to shed light on the drivers of the right tail of Superstar Founder wealth. In particular, we show how differential drifts in firm value, the level of idiosyncratic risk, ownership at IPO, and the speed of founders' share liquidations contributed to their observed wealth accumulation.

We study the relationship between entrepreneurs' human capital and their firms' outcomes, and its consequences for wealth inequality. High human capital enables entrepreneurs to earlier obtain financing from outside investors. This early financing enables entrepreneurs to grow their firms faster. We show that firms realize higher growth rates when entrepreneurs sell the firms sooner. For young firms, an additional one percent of firm ownership sold is associated with a fifteen percent increase in firms' growth rates. However, entrepreneurs who have earlier access to external financing tend to maintain larger ownership of their firms, leading to a lower growth rate despite high initial firm value.