Capital
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- 10 Aug 2019
- Working Paper Summaries
Varieties of Outward Chinese Capital: Domestic Politics Status and Globalization of Chinese Firms
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.
- 10 Apr 2019
- HBS Case
How Entrepreneurs Can Turn Lead Into Gold
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; Comment(s) posted.
- 19 Nov 2018
- Working Paper Summaries
Lazy Prices
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.
- 04 Oct 2018
- Research & Ideas
Diversity Boosts Profits in Venture Capital Firms
VC firms that score high in diversity among their partners also tend to be more profitable, according to Paul Gompers. Open for comment; Comment(s) posted.
- 02 Apr 2018
- Research & Ideas
Is 'Gut Feel' a Good Reason to Invest in a Startup?
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; Comment(s) posted.
- 29 Mar 2018
- Working Paper Summaries
Government Incentives and Financial Intermediaries: The Case of Chinese Sell-Side Analysts
This study is the first to examine analysts’ incentives vis-à-vis the government in a context where government has the ability and motives to influence capital market institutions. The paper highlights the role of government incentives in analysts’ behavior and output.
- 12 Mar 2018
- Op-Ed
Op-Ed: Why BlackRock CEO Larry Fink Is Not a Socialist
BlackRock CEO Larry Fink’s open letter to CEOs has reignited the “shareholders versus stakeholders” debate. Bill George says it's actually not much of a debate: mission-driven, values-centered companies perform better. Open for comment; Comment(s) posted.
- 29 Jan 2018
- Working Paper Summaries
Do Banks Have an Edge?
Reliance on high leverage is one distinctive component of the bank business model. This study suggests that the aggregate United States banking sector was relatively inefficient between 1960 and 2015. The falling costs of new production technologies in capital markets may further advantage capital markets over banks.
- 04 Aug 2017
- Working Paper Summaries
Private Equity and Financial Fragility During the Crisis
Examining the activity of almost 500 private equity-backed companies during the 2008 financial crisis, this study finds that during a time in which capital formation dropped dramatically, PE-backed companies invested more aggressively than peer companies did. Results do not support the hypothesis that private equity contributed to the fragility of the economy during the recent financial crisis.
- 11 May 2017
- Working Paper Summaries
Coordination Frictions in Venture Capital Syndicates
A startup typically has more than one investor, each with different incentives. Drawing on the authors’ experience, this paper documents frictions occurring when VCs with differing objectives work together in syndicates. Entrepreneurs must be careful about selecting and building the syndicate of VCs who back their firm.
- 10 May 2017
- Research & Ideas
Amazon Web Services Changed the Way VCs Fund Startups
Starting companies is becoming so quick and cheap that venture capitalists have shifted strategy funding entrepreneurs. Now, more startups get backing—but they have to prove themselves in a hurry, according to research by Ramana Nanda and colleagues. Open for comment; Comment(s) posted.
- 08 May 2017
- Working Paper Summaries
Monetary Policy and Global Banking
Global banks commonly move funds across markets to respond to differential monetary policy changes. This paper finds that cross-currency flows affect the cost of foreign exchange hedging, ultimately affecting credit supply in different currencies. The traditional view of how global banks respond to local shocks is weakened and, for major currencies, breaks down.
- 28 Feb 2017
- Working Paper Summaries
Patent Trolls and Small-Business Employment
Patent trolls are organizations that own patents but do not make or use the patented technology directly, instead using their patent portfolios to target firms with patent-infringement claims. This paper provides evidence that state anti-troll laws have had a net positive effect for small firms in high-tech industries. There is no significant effect for larger or non-high-tech firms.
- 13 Feb 2017
- Working Paper Summaries
Diversity in Innovation
This study discusses a systematic and persistent lack of female, Hispanic, and African American labor market participation in the innovation sector, through both entrepreneurs and the venture capitalists that fund them.
- 10 Feb 2017
- Working Paper Summaries
The Persistent Effect of Initial Success: Evidence from Venture Capital
To understand better what channels might account for persistence in the fund-level performance of private equity firms, the authors examine the individual investments underlying fund-level returns.
- 23 Sep 2016
- Working Paper Summaries
How Do Venture Capitalists Make Decisions?
This study surveys 885 institutional VCs at 681 firms asking how they make decisions across eight areas: deal sourcing; investment selection; valuation; deal structure; post-investment value-added; exits; internal VC firm issues; and external VC firm issues.
- 01 Sep 2016
- Cold Call Podcast
Behind Apple's Tax Situation, an Unprecedented Financial Policy
The European Union recently hit Apple with a $14.5 billion tax bill, but that’s hardly the first or worst financial challenge the technology giant has faced. Mihir Desai explains the financial wiring behind the inventors of the iPhone. Open for comment; Comment(s) posted.
- 17 Aug 2016
- Working Paper Summaries
Venture Capital Data: Opportunities and Challenges
Venture capital is a relatively small financial institution receiving a large amount of theoretical, empirical, policy, and media interest—perhaps because venture capital encompasses the extremes of corporate finance challenges: uncertainty, information asymmetry, and asset intangibility—and yet has been successful at growing many leading companies. This paper looks at the availability of information about venture capital. While it is it is difficult to paint in definitive terms the level of investment activity and fund performance, the quality of information available has increased in recent years and will likely continue to do so going forward.
- 02 Aug 2016
- Working Paper Summaries
Financial Regulation in a Quantitative Model of the Modern Banking System
This study at the intersection of macroeconomics and banking explores the optimal regulation of banks. Studying and quantifying the effects of capital requirements in a model that features regulated (commercial) and unregulated (shadow) banks, the authors find that a higher capital requirement makes regulated banks safer, but does not affect the riskiness of shadow banks. The net benefit of such a policy would depend on the level of fragility of the unregulated banks.
Can Capitalism Be Fixed by Making Companies More Just?
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; Comment(s) posted.