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COVID Was Supposed to Increase Bankruptcies. Instead, They've Gone Down.

by Rachel Layne

Down economic cycles and increasing unemployment usually usher in a rise in bankruptcies. Not so in the COVID-19 recession, where just the reverse has happened. Research by Raymond Kluender and colleagues. Open for comment; Comment(s) posted.

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.

Private Equity and COVID-19

by Paul A. Gompers, Steven N. Kaplan, and Vladimir Mukharlyamov

Private equity investors are seeking new investments despite the pandemic. This study shows they are prioritizing revenue growth for value creation, giving larger equity stakes to management teams, and targeting somewhat lower returns.

Long-Run Returns to Impact Investing in Emerging Markets and Developing Economies

by Shawn Cole, Martin Melecky, Florian Mölders, and Tristan Reed

Examination of every equity investment made by the International Finance Corporation, one of the largest and longest-operating impact investors, shows this portfolio has outperformed the S&P 500 by 15 percent.

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; Comment(s) posted.

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.

The Dark Side of Fintech Borrowing

by Rachel Layne

Fintechs have revolutionized the banking industry, but some customers end up worse for the experience, according to research by Marco Di Maggio and colleagues. Open for comment; Comment(s) posted.

Estimating Causal Effects in the Presence of Partial Interference Using Multivariate Bayesian Structural Time Series Models

by Fiammetta Menchetti and Iavor Bojinov

A case study of an Italian supermarket introducing a new pricing policy—in which it reduced prices on some brands—offers managers a new approach to reduce uncertainty. The approach is flexible and can be applied to different business problems.

Bankruptcy and the COVID-19 Crisis

by Jialan Wang, Jeyul Yang, Benjamin Iverson, and Ray Kluender

Analyzing the impact of the COVID-19 crisis on bankruptcy filing rates in the United States, this study finds that large businesses, small businesses, and consumers experience very different effects of the crisis.

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.

Many Small-Business Employees May Be Close to Losing Health Insurance

by Rachel Layne

Small-business owners have delayed rent payments and other bills to protect health benefits for employees. Now, financial pressure is mounting, according to research by Leemore Dafny, Yin Wei Soon, Zoë Cullen, and Christopher Stanton. Open for comment; Comment(s) posted.

Why American Health Care Needs Its Own SEC

by Regina E. Herzlinger

The United States needs a health care equivalent of the Securities and Exchange Commission to increase transparency and competition, argues Regina Herzlinger. Open for comment; Comment(s) posted.

The Pass-Through of Uncertainty Shocks to Households

by Marco Di Maggio, Amir Kermani, Rodney Ramcharan, Vincent Yao, and Edison Yu

A firm’s stock price volatility during times of uncertainty can significantly reduce workers’ consumption and savings decisions. This paper sheds light on the economic effects of uncertainty, and in particular, how firms provide insurance to their workers during periods of turmoil.

Best Ideas

by Miguel Antón, Randolph B. Cohen, and Christopher Polk

The “best ideas” in investment managers’ portfolios generate statistically and economically significant risk-adjusted returns over time, and they systematically outperform other positions in the portfolios. Investors can gain substantially if managers choose less-diversified portfolios that tilt more towards their best ideas.

Why Investors Often Lose When They Sue Their Financial Adviser

by Danielle Kost

Forty percent of American investors rely on financial advisers, but the COVID-19 market rollercoaster may have highlighted a weakness when disputes arise. The system favors the financial industry, says Mark Egan. Open for comment; Comment(s) posted.

Two Case Studies on the Financing of Forest Conservation

by Andrew Baxter, Connor Cash, Josh Lerner, and Ratnika Prasad

Case studies about The Conservation Fund and Sonen Capital highlight three broad lessons about fresh approaches to the ownership and management of forestland.

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.

Making Economics More Useful: How Technological Eclecticism Could Help

by Amar Bhidé

This paper shows how tools, such as simulations used to design new technologies, can facilitate collaborative economic policy judgments. The paper forms part of a broader, ongoing study of knowledge in practical fields such as engineering, medicine, and business.

Market Investors Pay More for Resilient Companies

by Kristen Senz

During a market collapse, investors will pay up for companies considered resilient in their response, according to George Serafeim. Open for comment; Comment(s) posted.