Saturday, Jan. 6, 2018 10:15 AM - 12:15 PM
- Chair: Ilya Strebulaev, Stanford University
Private Equity and Financial Fragility During the Crisis
AbstractDo private equity firms contribute to financial fragility during economic crises? We find that
during the 2008 financial crisis, PE-backed companies increased investments relative to their
peers, while also experiencing greater equity and debt inflows. The effects are stronger among
financially constrained companies and those whose private equity investors had more resources at
the onset of the crisis. PE-backed companies consequentially experienced higher asset growth and
increased market share during the crisis.
Fewer and Less Skilled? Human Capital, Competition, and Entrepreneurial Success in United States Manufacturing
AbstractWe use micro data on skills to analyze the human capital of entrepreneurial and incumbent plants in U.S. manufacturing over 2005-2013. We find a large drop in cognitive skills in entrepreneurial plants. This has long-term implications since initial cognitive skills at the plant level predict future skills and growth rates. The gap between entrant and incumbent skills increases with exposure to Chinese imports, with entrants' skills falling and those of incumbents increasing. Import competition explains between 17%-60% of the skill differential between entrants and incumbents. While high skilled incumbents grow faster than low skilled establishments in exposed industries, the evidence for entrants is weaker. Overall, we find that entrepreneurial firms and incumbents are acquiring different skill sets, leaving entrants more exposed to the risk of automation or offshoring.
Swimming With the Sharks: Entrepreneurial Investing Decisions and First Impression
AbstractWe examine the relation between entrepreneurial investing decisions and first impression regarding entrepreneurs’ characteristics, as featured in the TV show “Shark Tank.” We ask respondents through Amazon Mechanical Turk to rate still photographs of entrepreneur contestants along six dimensions and summarize these dimensions through their two principal components: competence/confidence and appearance/likability. We find that the likelihood of receiving a shark’s offer is associated positively with both components. However, conditional on getting an offer from a shark investor, the component capturing competence/confidence remains positively associated with the sharks’ offered cash and valuation, while the component capturing appearance/likability is negatively associated.
- G2 - Financial Institutions and Services