Do Business Ecosystems See Color?
This article describes an American community survey and a survey of business owners of which the data are merged to assess the experiences of minority- versus white-owned small businesses between 2007 and 2012. This is highlighted due to it being a period encompassing the worst economic downturn since The Great Depression. White firms declined while minority firms grew rapidly. Despite recent efforts to create inclusive entrepreneurial and business ecosystems, however, minority business owners made little progress toward achieving equity or parity with white business owners. Policy prescriptions and implications for future research are discussed. More
How Do Financial Expertise and Networks Affect Investing? Evidence from the Governance of University Endowments
Using the unique laboratory of university endowments, we study the effects of expertise and networks on investment performance. Using detailed information on more than 11,000 unique board members for 579 university endowments, we show that the financial expertise of an endowment’s governing board is positively correlated with allocations to alternative investments and higher total returns. The type of expertise matters as elements appear unique to particular subsets of alternatives, such as private equity and venture capital, which are more difficult to analyze and manage than traded public securities. More
Mind the Gap: The Interplay Between External and Internal Actions in the Case of Corporate Social Responsibility
We explore the effect of the interplay between a firm's external and internal actions on market value in the context of corporate social responsibility (CSR). Specifically, drawing from the neo-institutional theory, we distinguish between external and internal CSR actions and argue that they jointly contribute to the accumulation of intangible firm resources and are therefore associated with better market value. More
Leverage Cycles in a Mature Asset Class: New Evidence from a Natural Laboratory
We model leverage cycles in the natural laboratory of a mature asset class, namely US Commercial Real Estate. In this setting we can observe entrepreneurs' asset values as well as debt balance and thus model capital-market yields, as conditioned by market-wide leverage, which indicates debt availability. Using a VAR framework, we examine variance decompositions and impulse-response functions. We show that leverage constitutes the primary driver of innovations in capital-market yields and vice versa. We further find evidence for flight to quality as well as knock-on effects that affect low-leverage entrepreneurs in the market. More
Common Ground: How to pursue a mixed strategy for economic development and come out ahead
Like anyone trying to get something done with limited time and resources, economic developers have a lot of options to weigh when formulating a strategy to attract and retain businesses in their local economy. Over the years, economic development researchers have espoused a succession of theories as they’ve learned more about the many factors that influence economic growth. Historically, practitioners have tended to respond by focusing their efforts around what they perceive as the latest and greatest thinking, often at the expense of previously favored approaches. In practice, this has led to waves in which economic developers have focused on recruiting large, established companies or on fostering home-grown start-ups—but rarely both. More
Price Discovery of a Speculative Asset: Evidence from a Bitcoin Exchange
This paper examines price discovery and liquidity provision in the secondary market for bitcoin -- an asset that has no observable fundamentals and is associated with a high level of speculative trading. Based on a comprehensive dataset of the full limit order book of BTC-e over the 2013-2014 period, we find that order informativeness generally increases with order aggressiveness within the first 10 tiers, but that this pattern reverses in the outer layers of the book. In a high volatility environment, aggressive orders seem to be more attractive to informed agents, as reflected by the increased information content of such orders, although market liquidity appears to migrate outward in response to the information asymmetry. More
Net-Metered Distributed Renewable Energy: A Peril for Utilities?
Our paper studies the implications of “distributed renewable energy” (such as rooftop solar panels) for utility profits and social welfare under net metering that has sparked heated debates in practice. More
Activism and Empire Building
We study the role of hedge fund activists in curbing empire building. We show that firms with poor acquisition records are more likely to become activist targets. Our findings highlight an important channel through which activists improve the efficiency of public companies. More
Credit Default Swaps Around the World: Investment and Financing Effects
We analyze the impact of CDS introduction on real decision-making within the firm, taking into account differences in the local economic and legal environment of firms. We extend the model of Bolton and Oehmke (2011) in order to consider uncertainty in whether actions taken by the reference entity will trigger CDS obligations. More
Making Process Improvements Stick
Our findings debunk the myth that a ‘continuous improvement culture’ will emerge amongst workers and staff that sustains improvement efforts. The root cause behind backsliding is that sustaining process improvement initiatives involves all levels of the organisation, and that leaders play a pivotal role herein they often neglect. We identify four common failure modes. More
Can Investors Time Their Exposure to Private Equity?
We find modest gains, at best, to pursuing more realistic, investable strategies that time capital commitments to private equity. There is a high degree of time-series correlation in net cash flows even across commitment strategies that allocate capital in a very different manner over time. More