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Jennifer Kao (UCLA)

“Representation in Product Development: Evidence from Insurance and Clinical Trials” (paper)

coauthor Tamar Oostrom, OSU

Discussed by: Tong Liu (MIT)

Abstract

We investigate the causes and consequences of demographic disparities in product development. In 2000, Medicare extended coverage for clinical trial costs, lowering the cost of participation for elderly enrollees. This policy shifted the rate and direction of clinical research, leading to a 24 percent increase in trials targeting diseases common among the elderly, compared to those affecting younger populations. Trial sponsors expanded the enrollment criteria of trials to include more elderly participants. This policy was also associated with an increase in drug utilization for elderly drugs and a reduction in adverse events.

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Katja Kisseleva-Scherenberger (Frankfurt School of Finance & Management)

“With a Little Help from My Family: Informal Startup Financing” (paper)

coauthors Brian K. Baik (Harvard Business School) and Johan Karlsen (Norwegian School of Economics)

Discussed by: Tom Meling (OSU)

Abstract

Using a unique dataset that contains financial information of Norwegian startups and their investors, we depict the characteristics of informal financing, which are startup investments made by family of the entrepreneur. Consistent with theoretical predictions, we document that informal investments are associated with lower returns than external investments, and lower startup risk-taking behavior. On the other hand, firms that receive investments from both informal and external investors exhibit stronger forms of risk taking. Our instrumental variables (IV) regressions further support our findings. Reduced risk-taking behavior is mainly driven from wealthy informal investors, which is consistent with the argument that wealthy investors may be more risk averse. Collectively, our findings empirically illuminate an important source of startup financing that affects startup behavior.

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Apoorv Gupta (Dartmouth)

“Demographics and Technology Diffusion: Evidence from Mobile Payments” (paper)

coauthors Nicolas Crouzet (Northwestern), Pulak Ghosh (India Inst. of Mgmt) and Filippo Mezzanotti (Northwestern)

Discussed by: Boris Vallee (HBS)

Abstract

Using data on the adoption of mobile payment systems in India, we argue that the age composition of the population can impact the diffusion of new technologies. Evidence from a leading Indian bank shows that younger adults tend to prefer mobile payments over traditional cards. In a model of technology adoption, these age-driven differences in attitudes toward technology create stronger adoption incentives for businesses facing younger consumers. We validate this prediction using store-level data on mobile payment adoption by merchants. Our findings suggest that demographics can pose an obstacle to the diffusion of financial innovation.

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Daniel Karpati (ESE Rotterdam)

“Self-Employed Mothers: Child Penalties, Maternity Benefits, and Family Health” (paper)

coauthors  Fabrizio Core, ESE Rotterdam.

Discussed by: Elena Simintzi (UNC)
Abstract

We study the effects of motherhood on self-employed women’s business activity, and the moderating role of maternity benefits. Using rich administrative data from the Netherlands, we first document that childbirth reduces the business revenue of self-employed women by about 50% in the quarter of birth and 25% subsequently. We then study the introduction of a flat-rate maternity cash benefit for the self-employed. Exploiting variation in benefit eligibility by birth month, we estimate that mothers eligible for the benefit further reduce their business revenue and income in the first two years after childbirth. The decrease in business income amounts to approximately half of the benefit amount, leading to an overall increase in household income. Eligible mothers likely spend more time with their child, as the use of formal daycare is significantly reduced. Lastly, we assess the effects of benefit eligibility on the well-being of mothers and their children. While we find no impact on household composition or maternal health, the benefit does reduce health expenditures and medicine use among children in their first year after birth, although not in the long run.

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Yiming Qian (UConn)

Paper Title: “From Competitors to Partners: Banks’ Venture Investments in Fintech”

We hypothesize and find evidence that banks use financial investments in fintech startups
as a strategic approach to navigate fintech competition. We first document that banks’
venture investments have increasingly focused on fintech firms. We find that banks fac-
ing greater fintech competition are more likely to make venture investments in fintech
startups. Banks target fintech firms that exhibit higher levels of asset complementarities
with their own business. Finally, our instrumental variable analyses show that financial
investments result in increased probabilities of operational collaborations and knowledge
transfer between the investing bank and the fintech investee.

Presenter: Yiming Qian (UConn)

Coauthors: Manju Puri (Duke) and Xiang Zheng (Uconn)

Discussant: Paul H. Beaumont (McGill)

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Ye Zhang (SSE)

Paper Title: Does ESG Investing Help VC Funds to Attract Startups? Experimental Evidence

This paper studies how venture capitalists’ (VCs) ESG investments affect startups’ fundraising decisions, using complementary experiments with actual US startup founders. Results reveal the divergent effects of E and S. Founders are reluctant to collaborate with environmental VCs due to concerns about profitability and the likelihood of securing investment. However, founders, particularly those with ESG focus, favor social VCs partially due to their social preferences. A novel payment game experiment further confirms the existence of founders’ ESG preference in their fundraising endeavors. Lastly, there exist substantial heterogeneous effects based on founders’ political affiliations, industry backgrounds, investor gender, and market conditions.

Presenter: Ye Zhang (SSE)

Coauthors: 

Discussant: Emanuele Colonelli (Booth)

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Yuheng Ding (World Bank)

Paper Title: Mega Firms and Recent Trends in the U.S. Innovation: Empirical Evidence from the U.S. Patent Data

We use the U.S. patent data merged with firm-level datasets to establish new facts about the role of mega firms in generating “novel patents”—innovations that introduce new combinations of technology components for the first time. While the importance of mega firms in novel patents had been declining until about 2000, it has strongly rebounded since then. The timing of this turnaround coincided with the ascendance of firms that newly became mega firms in the 2000s, and a shift in the technological contents, characterized by increasing integration of Information and Communication Technology (ICT) and non-ICT components. Mega firms also generate a disproportionately large number of “hits”—novel patents that lead to the largest numbers of follow-on patents (subsequent patents that use the same combinations of technology components as the first novel patent)—and their hits tend to generate more follow-on patents assigned to other firms when compared to hits generated by non-mega firms. Overall, our findings suggest that mega firms play an increasingly important role in generating new technological trajectories in recent years, especially in combining ICT with non-ICT components.

Presenter: Yuheng Ding (World Bank)

Coauthors: Serguey Braguinsky, Joonkyu Choi, Karam Jo & Seula Kim

Discussant: Tim Simcoe (Boston Univ.)

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