Working Papers

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1. "Impact Investing and Venture Capital Industry: Experimental Evidence" 2021

Presentation: WFA (2022), RBFC (2022), ABFER (2023), Active Management Research Symposium - ESG Investing in Private Markets (2022), the 1st Conference in Sustainable Finance at the University of Luxembourg (2022), Conference on Ageing and Sustainable Finance (2022), AsianFA Annual Conference (2022), FMA European Conference (2022), FMARC (2022), IFN (2022), the Fourth Israel Behavioral Conference (2022), Bayes Business School (2022), SFiC (2022), MISUM (2022)

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Abstract: This paper studies the effect of startups' ESG characteristics on venture capitalists' investments by linking investors’ behavior in an incentivized experiment to their real-world portfolio data. I find that investors perceive impact ventures to be less profitable and harder to evaluate than similar profit-driven startups. Investors’ interest in impact ventures positively correlates with their social preferences, supporting the non-pecuniary motivation for impact investing. Impact ventures are also associated with better ex-post performance. The paper uses a dynamic Bayesian model to demonstrate how these identified beliefs and preferences affect impact investment in the venture capital industry.

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2. "How Venture Capitalists and Startups Bet on Each Other: Evidence From an Experimental System" 2020 with Mehran Ebrahimian

Presentation: WFA (2023), NBER SI Entrepreneurship (2023), ​EFA (2023), NFA (2023), AEF (2022), ENTFIN (2022), FMA Asia Pacific Conference (2022), IFN (2023), IBEFA (2023), FMA Europe (2023), HBS Seminar (2023)

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Abstract: We estimate a dynamic search-and-matching model with bargaining between venture capitalists (VCs) and startups using two symmetric incentivized resume rating (IRR) experiments implemented with real US VCs and startups. Participants evaluate randomized profiles of potential collaborators and are incentivized by real opportunities of being matched with their preferred cooperative partners. Using these experimental behaviors and real-world portfolio data as inputs to our structural model, we identify that both investors' human capital (i.e., entrepreneurial experiences) and funds' organizational capital (i.e., previous financial performance, fund size), as well as startups' human assets (i.e., educational background, entrepreneurial experiences) and non-human assets (i.e., traction, business model) impact matching payoff and continuation values of startups and VCs. While an average VC gets more value in equilibrium than an average startup due to better outside options, startups altogether receive four-fifths of the total present value of all matches in our environment.

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3. "Discrimination In the Venture Capital Industry: Evidence from Field Experiments" 2020

Reject and Resubmit the Journal of Finance

Presentation: HEC Paris Entrepreneurship Workshop (2021), NFN Young Scholars Workshop (2021), SFA (2022), HKUST (2021), UW Foster (2021), SSE (2021), Warwick (2021), CUHK Shenzhen (2021), University of Gothenburg (2022), EasternFA (2023), CES North America Conference (2023)

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Abstract:  This paper examines discrimination by early-stage US investors based on startup founders' gender and race using complementary field experiments. Consistent with the prediction of discrimination theories, results show that investors implicitly discriminate against women and Asians when evaluating attractive startups but favor them when evaluating struggling startups. Among multiple coexisting sources of discrimination identified, statistical discrimination and implicit discrimination are important reasons for investors' ``anti-minority'' behaviors. A novel consistent estimator is developed to measure the polarization of investors’ discrimination behaviors and their separate driving forces. Furthermore, gender homophily exists when investors provide anonymous encouragement to startup founders.

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4. "Startups' Strategies for Green Funding Adoption"

Previously circulated as "Does ESG Investing Help VC Funds to Attract Startups? Experimental Evidence" 2022

Best Paper Awards (ESG) at SWFA Annual Conference 2023

Best Paper Awards at SFA Annual Conference 2023

Vinnova Funding Grants 2022

Presentation: CICF (2023), WEFI (2023), Oxford Sustainable Private Markets Conference (2022), ​SFA (2023), the KWC/SNEE Conference on Sustainable Finance (2022), YSBC (2022), FMA Asia Pacific Conference (2022), SWFA (2023), FMA Europe (2023)

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Abstract: This paper examines how firms choose between ESG and profit-driven investors during the fundraising process within the startup-venture capital (VC) context. It employs real-stakes placement experiments with US startup founders, linking founders’ experimental behaviors with their real-world fundraising activities. While founders derive positive non-pecuniary utility from partnering with ESG VCs, VCs targeting environmental impact still struggle to attract startups due to financial reasons, with lower-quality VCs more affected. Founders believe such collaborations could hinder profitability and the likelihood of raising funding. Particularly, profit-driven startups, smaller startups, Republican founders, and startups in heavy industries demonstrate less interest in adopting green funding.

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5. "Two-sided Discrimination in an Entrepreneurial Financing Setting: Experimental and Theoretical Evidence" 2022 with Junlong Feng, Weijie Zhong

Research Funding from Stanford GSB

Presentation: AEA Poster (2022), Columbia Experimental Design Workshop (2022), ABFER (2024), World Finance Conference (2024)

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Abstract: To explain the unique persistent gender gap in the US entrepreneurial community, this paper conducts an experiment with real US startup founders. Results show that male entrepreneurs have implicit gender discrimination against female investors due to statistical discrimination. The discrimination is more salient among high-quality and senior investors, suggesting the existence of a glass ceiling for women. However, Asian investors do not suffer from a similar level of discrimination. We further provide a theoretical framework to explain several novel findings in recent experiments and demonstrate how two-sided gender discrimination perpetuates a persistently low female participation rate in entrepreneurial financing settings.
 

6. "Do Rounding-Off Heuristics Matter? Evidence from Bilateral Bargaining in the U.S. Housing Market" 2023 with Haaris Mateen, Franklin Qian, and Tianxiang Zheng

Supersedes the paper "The Microstructure of U.S. Housing Market: Evidence from Millions of Bargaining Interactions" 2021 with Haaris Mateen, Franklin Qian 

Presentation: Atlanta Fed (2022), Columbia Experimental Design Workshop (2023), AREUEA Annual Conference (2024), Yale Junior Finance Conference (2023)

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​​Abstract: Using confidential offer-level data on the US housing market, this paper examines rounding-off heuristics in the bilateral bargaining process. We demonstrate that home sellers and home buyers follow different rounding-off heuristics. Sellers' list prices cluster more frequently around charm numbers (e.g. 349,999) compared to buyers' offer prices and negotiated final sales prices which have relatively more salient round numbers. These charm list prices dominate round list prices by yielding a higher sales price and a shorter time on the market. Buyer counteroffers are driven by seller list price choices -- buyers are more likely to respond to a round/charm list price with an offer price at the corresponding rounding level with trivial adjustments. However, when sellers use round numbers as initial list prices, buyers are relatively more likely to use offer prices with greater counteroffer adjustments. These empirical findings provide novel insights into bilateral bargaining behavior in the U.S. housing market. We provide plausible mechanisms for our results.