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New research on financial assets from Harvard Business School faculty on issues including capital budgeting, venture capital, and working capital.
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It’s All in a Name: Reputable Investors Help Startups Shine

by Rachel Layne

Attracting high-quality talent is a challenge for any young firm. Shai Bernstein says startups get a reputation boost and draw more job applicants when they're backed by well-known venture capital investors.

Being Your Own Boss Can Pay Off, but Not Always with Big Pay

by Jay Fitzgerald

Working for yourself might bring freedom and autonomy, but it increasingly comes with a major risk: low pay. Research by William Kerr explores the shifting sands of self-employment.

How to Make Venture Capital Accessible for Black Founders: An Entrepreneur’s Dilemma

Re: Jo Tango

In May of 2021, Kevin D. Johnson had just graduated from a rigorous Executive MBA program, and he needed to decide on his next career move. Johnson was the founder and CEO of a successful media company, but his career goals had shifted during business school. He wanted to use his talents to help other BIPOC entrepreneurs access capital and provide opportunities to create intergenerational wealth. Johnson evaluated his four options: work full-time at an online platform dedicated to connecting Black founders with funding, join a BIPOC-focused venture capital ("VC") firm, pursue a job at an established VC firm, or continue scaling his media company. Harvard Business School senior lecturer Jo Tango and Johnson discuss which option he should choose in the case, “Kevin D. Johnson: To Be a Venture Capitalist or an Operator.” Open for comment; 0 Comments.

IPO or M&A? How Venture Capital Shapes a Startup's Future

by Rachel Layne

To a cash-strapped founder, any funding seems like a win, but research by Rory McDonald and colleagues shows that much more is at stake when it comes to venture capital. Open for comment; 0 Comments.

Short-Termism, Shareholder Payouts, and Investment in the EU

by Jesse M. Fried and Charles C.Y. Wang

Shareholder-driven “short-termism,” as evidenced by increasing payouts to shareholders, is said to impede long-term investment in EU public firms. But a deep dive into the data reveals a different story.

COVID Not Slowing VC Investment

by Danielle Kost

Despite the economic uncertainty, most venture capitalists expect their investments to outperform major equity indexes and are still funding new endeavors, says Paul Gompers. Open for comment; 0 Comments.

Venture Capitalists and COVID-19

by Paul A. Gompers, Will Gornall, Steven N. Kaplan, and Ilya A. Strebulaev

This survey of more than 1,000 venture capitalists finds that the VC industry and its portfolio companies have reduced their activity less than in previous recessions and have been more resilient than many other sectors of the global economy.

The Stock Market Value of Human Capital Creation

by Matthias Regier and Ethan Rouen

Measuring human capital creation is complex but increasingly important to managers for understanding the relationship between employee expenditures and firm performance. This paper develops a strategy to examine aspects of the intangible human capital investment embedded in a firm’s personnel expense. Closed for comment; 0 Comments.

Does Venture Capital Attract Human Capital? Evidence from a Randomized Field Experiment

by Shai Bernstein, Kunal Mehta, and Richard Townsend

Using a randomized field experiment conducted on a large online search platform, this study illustrates how investments by top venture capital investors attract potential employees and improve the pool of candidates available for the startup.

Fencing Off Silicon Valley: Cross-Border Venture Capital and Technology Spillovers

by Ufuk Akcigit, Sina T. Ates, Josh Lerner, Richard Townsend, and Yulia Zhestkova

This study of foreign corporate investment transactions from 32 countries between 1976 and 2015 finds these investments pose a trade-off: While they support young firms in pursuing innovations they could not otherwise afford, they also generate knowledge for the foreign investors.

The Evolution of CEO Compensation in Venture Capital-Backed Startups

by Michael Ewens, Ramana Nanda, and Christopher Stanton

Resolving uncertainty related to market demand—so called “product-market” fit—marks a key inflection point in the compensation contract for CEOs of venture-capital backed firms.

Sticky Capital Controls

by Miguel Acosta-Henao, Laura Alfaro, and Andrés Fernández

One of the legacies of the 2007–2008 global financial crisis has been a reassessment of the potential for restriction of capital flows policies. This paper documents a set of stylized facts on capital controls along their intensive and extensive margins for emerging markets and document them to be “sticky.” We then rationalize them through a model that includes fixed cost of implementing such policies, which lower the welfare gains of implementation.

Financial Distancing: How Venture Capital Follows the Economy Down and Curtails Innovation

by Sabrina T. Howell, Josh Lerner, Ramana Nanda, and Richard Townsend

Common wisdom holds that VC investment and VC-backed startups are relatively insulated from downturns. This study shows that the relative quantity and quality of innovation declines more for VC-backed firms than for other types of firms during downturns.

Why Backstage Capital Invests in ‘Underestimated’ Entrepreneurs

Re: Laura Huang

Laura Huang discusses VC Arlan Hamilton’s strategy of backing entrepreneurs who have been ignored because of stereotypes, biases, and preconceptions. Open for comment; 0 Comments.

Can Capitalism Be Fixed by Making Companies More Just?

Re: Ethan C. Rouen & Charles C.Y. Wang

JUST Capital seeks to make public companies more "just" by measuring and ranking their overall impact on society, based on priorities most important to average Americans. Ethan Rouen and Charles Wang explore whether JUST Capital's performance evaluation methodology can improve corporate behavior. Open for comment; 0 Comments.

Varieties of Outward Chinese Capital: Domestic Politics Status and Globalization of Chinese Firms

by Meg Rithmire

Most popular and scholarly writing about China’s global push overemphasizes the power of the state. This paper explains how three types of domestic Chinese capital—state capital, private capital, and crony capital—differ in political vulnerability and pursue globalization in different ways. All prefer capital openness, but they do so for different reasons.

How Entrepreneurs Can Turn Lead Into Gold

by Michael Blanding

Innovative about creating new products, entrepreneurs often lose imagination when it comes to funding their dreams. Andy Wu reveals alternatives beyond friends and family. Open for comment; 0 Comments.

Lazy Prices

by Lauren Cohen, Christopher J. Malloy, and Quoc Nguyen

The most comprehensive information windows that firms provide to the markets—in the form of their mandated annual and quarterly filings—have changed dramatically over time, becoming significantly longer and more complex. When firms break from their routine phrasing and content, this action contains rich information for future firm stock returns and outcomes.

Diversity Boosts Profits in Venture Capital Firms

by Michael Blanding

VC firms that score high in diversity among their partners also tend to be more profitable, according to Paul Gompers. Open for comment; 0 Comments.

Is 'Gut Feel' a Good Reason to Invest in a Startup?

by Michael Blanding

Most investments in startups should never be made, at least when using by-the-numbers reasoning. But funded they are. Laura Huang believes investors use gut instinct to manage that risk. Open for comment; 0 Comments.