Title: “Learning from Errors in Entrepreneurship” This paper studies how entrepreneurs form new beliefs after making forecast errors. I use survey-based micro data that are representative of the population of French entrepreneurs, and I find that 21% of entrepreneurs make optimistic errors, while 36% make pessimistic errors, suggesting that a minority of entrepreneurs are initially …
Author Archives: Michael Ewens
Jay Ritter (University of Florida)
Title: “SPACs” Going public by merging with a Special Purpose Acquisition Company (SPAC) is much more expensive than conducting a traditional IPO. We rationalize why some companies merge with a SPAC by listing the potential benefits. We analyze the agency problems that certain SPAC features address. SPAC IPO investors and deal sponsors have earned remarkably …
Yulia Zhestkova (University of Chicago)
Title: “Fencing Off Silicon Valley” The treatment of foreign investors is a contentious topic in U.S. entrepreneurship policy. We model a setting where foreign corporate investments in Silicon Valley may allow U.S. entrepreneurs to pursue technologies that they could not otherwise, but may also lead to knowledge spillovers. We show that despite the benefits from …
Jessica Jeffers (University of Chicago)
Title: “Risk and Return of Impact Investing Funds” We provide the first analysis of the risk exposure and risk-adjusted performance of impact investing funds, private market funds with dual financial and social goals. We introduce a dataset of impact fund cash flows and exploit distortions in VC performance measures to characterize risk profiles. Impact funds …
Will Gornall (University of British Columbia)
Title: “A Valuation Model of Venture Capital-Backed Companies with Multiple Financing Rounds” This paper develops the first option pricing model of venture capital-backed companies and their security values that incorporates the dilutive future financing rounds prevalent in the industry. Applying our model to 19,000 companies raising 37,000 rounds shows that preferred contractual features make the …
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Laura Lindsey (Arizona State University)
Title: “Mistake-based Discrimination in Early-stage Finance” Motivated by new stylized facts from Form D financings, we develop a simple framework in which security choice in early firm financing depends on the entrepreneurial talent contri- bution to firm value relative to capital, which investors may perceive with bias. Observed outcomes are not subject to such bias. …
Avri Ravid (Yeshiva University)
Title: “Innovation under Ambiguity and Risk” We model innovation investments as real options and explore the implications of ambiguity—Knightian uncertainty—and risk for innovation decisions. Our model provides predictions for creating options to invest and options to wait. The ensuing empirical analysis uses a risk measure and a new outcome-independent measure of ambiguity. We find a …
Sara Moreira (Northwestern University)
Title: “Patents to Products: Product Innovation and Firm Dynamics” We study the relationship between patents and actual product innovation in the market, and how this relationship varies with firms’ market share. We use textual analysis to create a new data set that links patents to products of firms in the consumer goods sector. We find …
Petra Moser (New York University)
Title: “Women in Science: Lesson from the Baby Boom” How do children affect women in science? We investigate this question using rich biographical data, linked with patents and publications, for 83,000 American scientists in 1956 at the height of the baby boom. Our analyses reveal a unique life-cycle pattern of productivity for mothers. While other …
Raghu Rajan (University of Chicago, Booth)
Title: “Kill Zone” Venture capitalists suggest that incumbent internet platforms create a kill zone around themselves, where any competing entrant is acquired quickly. Consequently, financing new startups becomes unprofitable. We construct a simple model that rationalizes the existence of a kill zone. The price at which an acquisition is done depends on the number of …
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