READING LIST
Empirical Masterclass in Entrepreneurial Finance and Venture Capital Laura A. Lindsey, W.P. Carey School of Business, Arizona State University **Denotes required readings; * Denotes readings also eligible for write-­‐ups Session 1a: Entrepreneurs *Gompers, Paul, Anna Kovner, Josh Lerner, and David Scharfstein, 2010, Performance Persistence in Entrepreneurship, Journal of Financial Economics 96, 18-­‐32. **Gompers, Paul, Josh Lerner, and David Scharfstein, 2005, Entrepreneurial spawning: Public corporations and the genesis of new ventures, 1986–1999, Journal of Finance 60, 577–614. *Gottlieb, Joshua D., Xu Ting, and Richard R Townsend, 2016, Experimenting with Entrepreneurship: The Effect of Job-­‐Protected Leave, Tuck School of Business Working Paper No. 2714577. Hellmann, Thomas, 2007, When do employees become entrepreneurs?, Management Science 53, 919-­‐933. Klepper, Steven and Sally Sleeper, 2005, Entry by Spinoffs, Management Science 51, 1291-­‐1306. Lazear, Edward P., 2004, Balanced Skills And Entrepreneurship, American Economic Review 94, 208-­‐211. *Lerner, Josh and Ulrike Malmendier, 2012, With a little help from my (random) friends: success and failure in post-­‐business school entrepreneurship, Review of Financial Studies, forthcoming. Nanda, Ramana and J.B. Sørensen, 2010, Workplace peers and entrepreneurship, Management Science 56, 1116 – 1126. Puri, Manju and David T. Robinson, 2007, Optimism and economic choice, Journal of Financial Economics 86, 71-­‐99. Wasserman, Noam, 2003, Founder-­‐CEO Succession and the Paradox of Entrepreneurial Success, Organization Science 14, 149-­‐172. Session 1b: Investor Matching Bengtsson, Ola, 2013, Relational venture capital financing of serial founders, Journal of Financial Intermediation 22, 308-­‐334. 1 **Bernstein, Shai, Arthur Korteweg and Kevin Laws, 2015, Attracting Early Stage Investors: Evidence from a Randomized Field Experiment, Journal of Finance, forthcoming. Hellmann, Thomas F., 2007, Entrepreneurs and the Process of Obtaining Resources, Journal of Economics, Management, and Strategy 16, 81-­‐109. **Hsu, David, 2004, What Do Entrepreneurs Pay for Venture Capital Affiliation? Journal of Finance 59, 1805-­‐1844. Kirsch, David, Brent Goldfarb and Azi Gera, 2009, Form or substance: the role of business plans in venture capital decision making, Strategic Management Journal 30, 487-­‐515. **Sørensen, Morten, 2007, How smart is the smart money? A two-­‐sided matching model of venture capital Journal of Finance 62:6, 2725-­‐62. Sessions 2a and 2b: Venture Capital Barry, Christopher, Chris Muscarella, John Peavey, and Michael Vetsuypens, 1990, The role of venture capital in the creation of public companies, Journal of Financial Economics 27, 447– 471. Barrot , Jean-­‐Noel, 2012, Investor horizon and the life cycle of innovative firms: Evidence from venture capital, Working paper. **Bernstein, Shai, Xavier Giroud, and Richard Townsend, 2015, The Impact of Venture Capital Monitoring: Evidence from a Natural Experiment, Journal of Finance, forthcoming. **Bottazzi, Laura, Marco Da Rin and Thomas Hellmann, 2008, Who are the active investors? Evidence from venture capital, Journal of Financial Economics 89, 488-­‐512. Brander, J., R. Amit, and W. Antweiler. 2002, Venture Capital Syndication: Improved Venture Selection vs. The Value-­‐Added Hypothesis, Journal of Economics, Management, and Strategy 11, 423–52. Chemmanur, Thomas J., Karthik Krishnan, and Debarshi K. Nandy, 2011, How does venture capital financing improve efficiency in private firms? A look beneath the surface, Review of Financial Studies 24, 4037-­‐4090. *Ewens, Michael, Ramana Nanda, and Mathew Rhodes-­‐Kropf, 2015, Cost of Experimentation and the Evolution of Venture Capital, Working paper. *Ewens, Michael, and Mathew Rhodes-­‐Kropf, 2015, Is a VC Partnership Greater than the Sum of its Partners? Journal of Finance 70, 1081–1113. Fulghieri, Paolo and Merih Sevilir, 2009, Size and focus of a venture capitalist's portfolio, Review of Financial Studies 22, 4643-­‐4680. 2 Gompers, Paul, Anna Kovner, Josh Lerner, and David Scharfstein, 2009, Specialization and Success: Evidence from Venture Capital, Journal of Economics and Management Strategy 18, 817-­‐845. **Gompers, Paul, Anna Kovner, Josh Lerner, and David Scharfstein, 2007, Venture capital investment cycles: The impact of public markets, Journal of Financial Economics 87, 1–23. Gorman, Michael, and William Sahlman, 1989, What do venture capitalists do? Journal of Business Venturing 4, 231–248. Hellmann, T, and M. Puri, 2000, The Interaction between Product Market and Financing Strategy: The Role of Venture Capital, Review of Financial Studies 13, 959-­‐984. **Hellmann, Thomas and Manju Puri, 2002, Venture Capital and the Professionalization of Start-­‐ up Firms: Empirical Evidence, Journal of Finance 57, 169-­‐197. Hochberg, Yael V., 2012, Venture capital and corporate governance in the newly public firm, Review of Finance 16, 429-­‐480. ** Kaplan, Steven N., Berk A. Sensoy, and Per Strömberg, 2009, Should investors bet on the jockey or the horse? Evidence from the evolution of firms from early business plans to public companies, Journal of Finance 64, 75-­‐115. Lerner, Josh, 1995, Venture capitalists and the oversight of private firms, Journal of Finance 50, 302–318. *Lindsey, Laura, 2008, Blurring firm boundaries: The role of venture capital in strategic alliances, Journal of Finance 63, 1137-­‐1168. Nanda, Ramana and Matthew Rhodes –Kropf, 2013, Investment cycles and startup innovation, Journal of Financial Economics 110, 403-­‐418. **Puri, Manju and Rebecca Zarutskie, 2012, On the lifecycle dynamics of venture capital and nonventure capital financed firms, Journal of Finance 67, 2247–2293. **Sahlman, W. 1990. The Structure and Governance of Venture Capital Organizations. Journal of Financial Economics 27, 473–521. *Tian, Xuan and Tracy Wang, 2014, Tolerance for failure and corporate innovation, Review of Financial Studies 27, 211-­‐255. Ueda, M., 2004, Banks versus venture capital: Project evaluation, screening, and expropriation, Journal of Finance 59, 601-­‐621. Zarutskie, Rebecca, 2010, The role of top management team human capital in venture capital markets: Evidence from first-­‐time funds, Journal of Business Venturing 25, 155-­‐172. 3 Session 3a: Alternative Sources of Funds *Adelino, Manual, Antoinette Schoar, and Felipe Severino 2015, House Prices, Collateral and Self-­‐
Employment, Journal of Financial Economics, forthcoming. Cohen, S. and Yael Hochberg , 2014, Accelerating startups: The seed accelerator phenomenon, Working paper. *Chemmanur, Thoman, E. Loutskina, and X. Tian, 2014, Corporate Venture Capital, Value Creation, and Innovation, Review of Financial Studies 27, 2434-­‐2473. Fehder, Daniel C. and Yael Hochberg , 2014, Accelerators and the regional supply of venture capital investment, Working paper. Fulghieri, Paolo and Merih Sevilir, 2009, Organization and financing of innovation, and the choice between corporate and independent venture capital, Journal of Financial and Quantitative Analysis 44, 1291-­‐1321. Gompers, Paul, and Josh Lerner, 2000, The determinants of corporate venture capital success: Organizational structure, incentives, and complementarities, in Randall Morck, ed.: Concentrated Ownership (University of Chicago Press, Chicago, IL). Gonzalez-­‐Uribe, Juanita and Michael Leatherbee ,2015, Business Accelerators: Evidence from Start-­‐Up Chile, Working paper. Hellmann, Thomas, 2002, A theory of strategic venture investing, Journal of Financial Economics 64, 285–314. **Hellmann, Thomas, Laura Lindsey, and Manju Puri, 2008, Building relationships early: Banks in venture capital, Review of Financial Studies 21, 513-­‐541. Hochberg, Yael V., Carlos Serrano, and Rosemarie H. Ziedonis, 2015, Patent collateral, investor commitment, and the market for venture lending, Working paper. **Kerr, William R., Josh Lerner, and Antoinette Schoar, 2011, The consequences of entrepreneurial finance: a regression discontinuity analysis, Review of Financial Studies, forthcoming. Kerr, William R. and Ramana Nanda, 2009, Democratizing entry: Banking deregulations, financing constraints, and entrepreneurship, Journal of Financial Economics 94, 124-­‐149. Lerner, Josh, 1998, Angel financing and public policy: An overview, Journal of Banking & Finance 22, 773-­‐783. Li, Emma and J. Spencer Martin, Capital Formation and Financial Intermediation: The Role of Entrepreneur Reputation Formation, Journal of Corporate Finance, forthcoming. 4 *Ma, Song, 2015, The Life Cycle of Corporate Venture Capital, Duke University working paper. Session 3b: Staging and Contracting (including LP/GP) Admati, Anat, and Paul Pfleiderer, 1994, Robust financial contracting and the role of venture capitalists, Journal of Finance 49, 371–402. Barber, Brad M. and Ayako Yasuda, 2016 Interim Fund Performance and Fundraising in Private Equity, UC Davis working paper. Bengtsson, Ola and Berk A. Sensoy, 2011, Investor abilities and financial contracting: Evidence from venture capital, Journal of Financial Intermediation 20, 477-­‐502. Bienz, Carsten and Julia Hirsch, 2011, The Dynamics of Venture Capital Contracts, Review of Finance 16, 157-­‐195. Bitler, Marianne P., Tobias J. Moskowitz and Annette Vissing-­‐Jorgensen, 2005, Testing agency theory with entrepreneur effort and wealth, Journal of Finance 60, 539-­‐576. Broughman, Brian J. and Jesse M. Fried, 2010, Renegotiation of cash flow rights in the sale of VC-­‐
backed firms, Journal of Financial Economics 95, 384-­‐399. Broughman, Brian J. and Jesse M. Fried, 2012, Do VCs use inside rounds to dilute founders? Some evidence from Silicon Valley, Journal of Corporate Finance 18, 1104-­‐1120. Cestone, Giacinta, 2014, Venture Capital Meets Contract Theory: Risky Claims or Formal Control? Review of Finance 18, 1097-­‐1137. Cornelli , Francesca and Oved Yosha, 2003, Stage financing and the role of convertible securities, Review of Economic Studies 70, 1-­‐32. *Gompers, Paul, 1995, Optimal investment, monitoring, and the staging of venture capital, Journal of Finance 50, 1461–1489. Gompers, Paul, and Josh Lerner, 1996, Use of Covenants: An Empirical Analysis of Venture Partnership Agreements, Journal of Law & Economics 39, 463-­‐498. Gompers, Paul, and Josh Lerner, 1999, An analysis of compensation in the US venture capital partnership, Journal of Financial Economics 51, 3-­‐44. Hellmann, Thomas and Veikko Thiele, 2015, Contracting among founders, Journal of Law, Economics, and Organization 31, 629-­‐661. Hellmann, Thomas, 1998, The allocation of control rights in venture capital contracts, RAND Journal of Economics 29, 57-­‐76. Hellmann, Thomas, 2006, IPOs, acquisitions, and the use of convertible securities in venture 5 capital, Journal of Financial Economics 81, 649-­‐679. **Kaplan, Steven, and Per Stromberg, 2003, Financial Contracting Theory Meets the Real World: An Empirical Analysis of Venture Capital Contracts, Review of Economic Studies 70, 281–315. **Kaplan, Steven, and Per Stromberg, 2004, Characteristics, Contracts, and Actions: Evidence from Venture Capitalist Analyses, Journal of Finance 59, 2173–2206. Robb, Alicia M. and David T. Robinson, 2014, The capital structure decisions of new firms, Review of Financial Studies 27, 153-­‐179. Schmidt, Klaus, 2003, Convertible securities and venture capital finance, Journal of Finance 58, 1139-­‐1166. *Tian, Xuan, 2011, The causes and consequences of venture capital stage financing, Journal of Financial Economics 101, 132–159. Session 4a: Differences Around the World Balcarcel, Ana, Michael Hertzel, and Laura Lindsey, 2014, Contracting Frictions and Cross-­‐Border Capital Flows: Evidence from Venture Capital, Working paper. Bottazzi, Laura, Marco Da Rin and Thomas F. Hellmann, 2009, What is the role of legal systems in financial intermediation? Theory and Evidence, Journal of Financial Intermediation 18, 559-­‐
598. ** Bottazzi, Laura, Marco Da Rin and Thomas F. Hellmann, 2016, The importance of trust for investment: Evidence from venture capital, Review of Financial Studies, forthcoming. Cumming, Douglas, Grant Fleming and Armin Schwienbacher, 2006, Legality and venture capital exits, Journal of Corporate Finance 12, 214-­‐245. Jeng, Leslie and Philippe Wells, 2000, The determinants of venture capital funding: Evidence across countries, Journal of Corporate Finance 6, 241-­‐289. *Kaplan, Steven N., Frederic Martel and Per Strömberg, 2007, How do legal differences and learning affect financial contracts?, Journal of Financial Intermediation 16, 273-­‐311. *Lerner, Josh and Antoinette Schoar, 2005, Does legal enforcement affect financial transactions? The contractual channel in private equity, Quarterly Journal of Economics 120, 223 – 246. Session 4b: Networks (and Investor Interaction) Bhagwat, Vineet, 2011, Manager Networks and Coordination of Effort: Evidence from Venture Capital Syndication, Working paper. 6 Casamatta, Catherine and Carole Haritchabalet, 2007, Experience, Screening and Syndication in Venture Capital Investments, Journal of Financial Intermediation 16, 368-­‐398. Bubna, Amit, Sanjiv R. Das and Nagpurnanand Prabhala, 2015, What Types of Syndicate Partners Do Venture Capitalists Prefer? Evidence from VC Communities, Working paper. Cestone, Giacinta, Lucy White, and Josh Lerner, 2007, The design of syndicates in venture capital, Working paper. Gompers, Paul, Vladimir Mukharlyamov and Yuhai Xuan, 2016 ,The cost of friendship, Journal of Financial Economics 119, 626–644. Hellmann, Thomas and Veikko Thiele, 2015, Friends or foes? The interrelationship between angel and venture capital markets, Journal of Financial Economics 115, 639-­‐653. **Hochberg, Yael, Yang Lu, and Alexander Ljungqvist, 2007, Whom you know matters: Venture capital networks and investment performance, Journal of Finance 62, 251–301. Hochberg, Yael, Yang Lu, and Alexander Ljungqvist, 2010, Networking as a barrier to entry and the competitive supply of venture capital, The Journal of Finance 65, 829–859. **Hochberg, Yael, Laura Lindsey, and Mark Westerfield, 2015, Resource Accumulation Through Economic Ties: Evidence from Venture Capital, Journal of Financial Economics 118, 245-­‐267. Lerner, Josh, 1994, The syndication of venture capital investments, Financial Management 23, 16-­‐27. Sorenson, Olav and Toby Stuart, 2001, Syndication Networks and the Spatial Distribution of Venture Capital Investments, American Journal of Sociology 106, 1546-­‐1588. Session 5a: Exit and Performance Bayar, O. and Thomas J. Chemmanur, 2012, IPOs versus acquisitions and the valuation premium puzzle: a theory of exit choice by entrepreneurs and venture capitalists, Journal of Financial and Quantitative Analysis 46, 1755-­‐1793. Black, Bernard and Ronald J. Gilson, 1998, Venture capital and the structure of capital markets banks versus stock markets, Journal of Financial Economics 47, 243-­‐277. Cochrane, John H., 2005, The risk and return of venture capital, Journal of Financial Economics 75, 3–52. Ewens, Michael, Charles Jones and Matthew Rhodes-­‐Kropf, 2013, The price of diversifiable risk in venture capital and private equity, Review of Financial Studies 26, 1854-­‐1889. 7 Franzoni, F., E Nowak and L Phalippou, 2012, Private equity performance and liquidity risk, Journal of Finance 67, 2341-­‐2373. Gompers, Paul, 1996, Grandstanding in the venture capital industry, Journal of Financial Economics 42, 133–156. Gompers, Paul, and Josh Lerner, 1998, Venture capital distributions: Short-­‐run and long-­‐run reactions, Journal of Finance 53, 2168–2183. Gompers, Paul and Josh Lerner, 2000, Money chasing deals? The impact of fund inflows on private equity valuations, Journal of Financial Economics 55, 281-­‐325. *Habib, M.A. and A. Ljungqvist , 2001, Underpricing and entrepreneurial wealth losses in IPOs: Theory and evidence, Review of Financial Studies 14, 433-­‐458. Hochberg, Yael V., Alexander Ljungqvist and Annette Vissing-­‐Jorgensen, 2014, Informational holdup and performance persistence in venture capital, Review of Financial Studies 27, 102-­‐
152. **Kaplan, S., Schoar, A., 2005, Private equity performance: returns, persistence, and capital flows, Journal of Finance 60, 1791–1823. Korteweg, Arthur and Stephan Nagel, 2013, Risk-­‐adjusting the returns to venture capital, NBER working paper. **Korteweg, Arthur and Morten Sørensen, 2010, Risk and return characteristics of venture capital-­‐backed entrepreneurial companies, Review of Financial Studies 23, 3738-­‐3772. Korteweg, Arthur and Morten Sørensen, 2015, Skill and luck in private equity performance, Rock Center for Corporate Governance at Stanford University working paper. Lerner, Josh, 1994, Venture capitalists and the decision to go public, Journal of Financial Economics 35, 293-­‐316. Lerner, Josh, Antoinette Schoar, Wan Wongsunwai, 2007 Smart institutions, foolish choices: The limited partner performance puzzle, Journal of Finance 62, 731-­‐764. Masulis, Ronald W. and Rajarishi Nahata, 2011, Venture Capital Conflicts of Interest: Evidence from Acquisitions of Venture Backed Firms, Journal of Financial and Quantitative Analysis 46, 395-­‐430. Megginson, William, and Kathleen Weiss, 1991, Venture capital certification in initial public offerings, Journal of Finance 46, 879–903. *Metrick , Andrew and Ayako Yasuda, 2010, The Economics of Private Equity Funds, Review of Financial Studies 23, 2303-­‐2341. 8 *Moskowitz, Tobias J. and Annette Vissing-­‐Jorgensen, 2002, The returns to entrepreneurial investment: A private equity premium puzzle? American Economic Review 92, 745-­‐778. Nahata, Rajarishi, 2008, Venture Capital Reputation and Investment Performance, Journal of Financial Economics 90, 127-­‐151. Neus, W. and U. Walz, 2005, Exit timing of venture capitalists in the course of an initial public offering, Journal of Financial Intermediation 14, 253-­‐277. Phalippou, Ludovic and Oliver Gottschalg, 2009, The performance of private equity funds, Review of Financial Studies 22, 1747-­‐1776 . *Robinson, David T. and Berk Sensoy, 2013, Do Private Equity Managers Earn Their Fees? Compensation, Ownership, and Cash Flow Performance, Review of Financial Studies, forthcoming. Sørensen, Morten and Ravi Jagannathan, 2015, The public market equivalent and private equity performance, Financial Analysts Journal 71, 43-­‐50. Sørensen, Morten, N. Wang, and J .Yang, 2012, Valuing private equity, Review of Financial Studies 27, 1977-­‐2021. Session 5b: Economic Impact Adelino, Manuel, Song Ma and David T. Robinson, 2016, Firm Age, Investment Opportunities, and Job Creation, Duke University working paper. Goldfarb, Brent, David Kirsch, and David A. Miller, 2007, Was there too little entry during the Dot Com Era?, Journal of Financial Economics 86, 100-­‐144. * Glaeser, Edward L., Sari Pekkala Kerr, and William R. Kerr, 2015, Entrepreneurship and urban growth: An empirical assessment with historical mines, Review of Economics and Statistics 2, 498-­‐519. *Gonzalez-­‐Uribe, Juanita, 2014, Venture Capital and the Diffusion of Knowledge, LSE Working paper. Kortum, Samuel S. and Josh Lerner, 1998, Does Venture Capital Spur Innovation? NBER Working Paper No. w6846. Kovner , Ana and Josh Lerner, 2015, Doing Well by Doing Good? Community Development Venture Capital, Journal of Economics and Management Strategy 24, 643-­‐663. Townsend, Richard, 2015, Propagation of Financial Shocks: The Case of Venture Capital, Management Science 61, 2782-­‐2802. 9 Survey Articles and Methodological Resources Ang, Andrew and Morten Sørensen, 2014, Risks, returns, and optimal holdings of private equity: A survey of existing approaches, The Quarterly Journal of Finance 2, 1250011. Angrist, Joshua D., and Jörn-­‐Steffen Pischke, 2009, Mostly Harmless Econometrics: An Empiricist’s Companion, Princeton: Princeton University Press. Bertrand, Marianne, Esther Duflo, and Sendhil Mullainathan, 2004, How much should we trust difference-­‐in-­‐differences estimates? Quarterly Journal of Economics 119, 249-­‐275. **Da Rin, Marco, Thomas Hellmann, and Manju Puri, 2012, A survey of venture capital research; in George Constantinides, Milton Harris, and René Stulz (eds) Handbook of the Economics of Finance, vol 2, Amsterdam, North Holland. Denis, David, 2004, Entrepreneurial finance: an overview of the issues and evidence, Journal of Corporate Finance 10, 301-­‐326. Kaplan, Steven N. and Berk A. Sensoy, 2015, Private equity performance: A Survey, Annual Review of Financial Economics 7, 597-­‐614. Kerr, William R. and Ramana Nanda, 2015, Financing Innovation, Annual Review of Financial Economics, Annual Reviews, 445-­‐462. Li, Kai, and Nagpurnanand R. Prabhala, 2007, Self-­‐Selection Models in Corporate Finance, in B. Espen Eckbo (ed) Handbook of Corporate Finance, vol 1, Amsterdam, North Holland. Metrick, Andrew and Ayako Yasuda, 2011, Venture Capital and Other Private Equity: A Survey, European Financial Management 17, 619-­‐654. Roberts, Michael, and Toni Whited, 2012, Endogeneity in empirical corporate finance; in George Constantinides, Milton Harris, and René Stulz (eds) Handbook of the Economics of Finance, vol 2, Amsterdam, North Holland. 10