Published:
This is an R script that I used in my paper CEO Emotions and Firm Valuation in Initial Coin Offerings: An Artificial Emotional Intelligence Approach which computes the seven basic Ekman (1999) emotions from facial muscle contraction-relaxation patterns based on Microsoft’s Face API. Read more
Published:
The code implements a machine-learning approach to construct ESG ratings for startups from text data (e.g., whitepapers, pitch decks, blog posts, Tweets). Our approach is also available via a web app → no ML/Python skills required (simply copy&paste text). Read more
Published:
The code implements a Graph Convolutional Network (GCN) model to classify cybercriminal and non-cybercriminal addresses on the Ethereum blockchain, using ATGraph technology. Our approach uses several on-chain input features for classification. It builds on Hornuf, Momtaz, Nam, and Ye (2024) and is designed to perform well in samples of limited size. Read more
Published:
Universal Instrumental Variables (UnIVs) help to address the endogeneity problem associated with the reflection problem in peer groups (i.e., disentangling the causal effect from a firm-specific treatment from a potentially latent variable that affects the entire peer group). The data help to causally identify peer effects in any product market classified by SIC codes. The instrumental variables have desirable properties, such as a (by econometrical construction) guaranteed exclusion restriction. Read more
Published:
The Toxic Chemical Emissions Database (TCED) consists of all non-greenhouse gas (non-GHG) toxic chemical emissions in the US and Europe. To facilitate cross-continental comparisons, we have harmonized the reported chemicals, based on OECD suggestions. We also propose a novel measure of industrial chemical pollution that accounts for the toxicity of the more than 800 tracked chemicals. Read more
Published:
The Token Offerings Research Database (TORD) consists of hand-collected ICOs, IEOs, and STOs. As of March 2025, the TORD is more comprehensive than any other publicly available token offerings database. Read more
Published at: Oxford Business Law Blog
A vast literature studies the role of institutions, such as regulation, for economic outcomes. An implicit assumption in many theoretical and empirical studies in the field is that the law is perfectly enforceable. However, in practice, most of the time this is not the case. The law may not be perfectly enforceable for several reasons. One reason is that enforcers may be capacity-constrained and therefore cannot prosecute each case. Another reason is that the costs of enforcement are too high to motivate economic agents to insist on their rights. There is another ‘European-specific’ reason for imperfect enforcement: European member states, which are obliged to transpose EU-level directives into national laws, often have considerable discretion over the design and scope of their enforcing bodies within their jurisdictions, which they may use to conserve or increase their competitive advantage. Read more
Published at: Oxford Business Law Blog
“Never again” was the impassioned conviction of governments worldwide after being forced to bail out banking institutions and provide guarantees and capital to avert systemic collapse as a result of the global financial crisis of 2007/08. Since then, the responsible international regulatory bodies have developed a slew of new regulations, including enhanced supervision, capital surcharges, and resolution regimes specifically for banks that would jeopardize the financial system if they were to fail. But is this bail-in regime credible? Read more
Finance Research Letters (with W. Drobetz)
Abstract: Cross-border acquisitions lead to improvements in shareholder rights and more dispersed ownership structures in a large sample of intra-European takeovers. These findings are evidence of corporate governance convergence toward the Anglo-Saxon system through cross-border takeovers. However, we find no support for the corporate governance motive hypothesis in cross-border acquisitions even after accounting for potential sample selectivity. Although acquirers have significantly better shareholder rights than their targets, there are no robust marginal bidder wealth effects for firms that acquire either weaker or stronger governance foreign targets. Instead, bidder wealth effects in cross-border acquisitions are better explained by acculturation costs. [working paper version here]
The Journal of Alternative Investments Spring 2019 (with H. Schröder and W. Drobetz)
Abstract: The authors examine to what extent the market for initial coin offerings (ICOs) is driven by investor sentiment. Their results, based on a comprehensive set of sentiment and coin price data, suggest that the ICO market is driven by crypto-related sentiment, but is almost unrelated to general capital market sentiment. Among the crypto-related sentiment, social media channels, rather than traditional news channels, are the main source of investor sentiment. The authors find that ICO firms exploit “windows of opportunity” and avoid periods of negative sentiment. Coins listed during periods with negative investor sentiment generate negative returns in the short run. Moreover, returns to investors on the first day of trading predict long-run returns up to six months. [working paper version here]
The Journal of Alternative Investments Spring 2019
Abstract: Token sales or initial coin offerings (ICOs) are smart contracts on a blockchain designed to raise external finance by issuing tokens or coins. This introduction provides an overview of this novel financing method. Differences between tokens and coins, types of tokens, and various ICO mechanisms are discussed. The author also describes the evolution of the ICO market and surveys some advantages of ICOs. [working paper version here]
Small Business Economics, Forthcoming
Abstract: A defining feature of initial coin offerings (ICOs) is that entrepreneurs bear the full marginal investment cost but profit only partially from the marginal investment payoff. This design may exacerbate agency conflicts inherent in corporate finance. As a consequence, signals of entrepreneurial quality such as CEO loyalty, which is an established concept in social psychology and can easily be linked to potential agency conflicts in corporate settings, might be a first-order determinant of economic outcomes in the ICO market. Consistent with this, I find that loyal CEOs have to offer less financial incentives to attract investors and are still able to raise more proceeds, conduct ICOs more thoroughly, and are less likely to fail. The findings are consistent with the hypothesis that asymmetric information between entrepreneurs and investors entail agency costs that are decreasing in CEO loyalty. [working paper version here]
The European Journal of Finance
Abstract: This paper examines the performance of cryptocurrencies issued in initial coin offerings (ICOs) over a three-year period after the initial exchange listing. Average (median) ICO underpricing amounts to 15% (3%), even though 4 out of 10 ICOs destroy value on the first trading day. Liquidity, market capitalization, and high-low price ratios predict returns. Long-run buy-and-hold returns are positive for the mean and negative for the median. For holding periods between one and twenty-four months, the median ICO depreciates by 30%. Evidently, there is substantial positive skewness in the cryptocurrency market. Further, a size effect emerges from the data as an empirical regularity: Large ICOs are more often overpriced and underperform in the long run. [working paper version here]
Journal of Applied Statistics
Abstract: Because time is a key determinant of entrepreneurial decision making, time-to-event models are ubiquitous in entrepreneurship. Widespread econometric misconception, however, may cause complicated biases in existing studies. The reason is spurious duration dependency, a complicated form of endogeneity caused by unobserved heterogeneity. This article discusses the endogeneity problem and methods to debias time-to-event models in entrepreneurship. Simulations and empirical evidence indicate that only the frailty approach yields consistently unbiased parameter estimates. An application to start-up firms’ time-to-funding shows that other methods lead to dramatic biases. Therefore, this article advocates a paradigm shift in the modeling of time variables in entrepreneurship. [working paper version here]
Finance Research Letters (with J. A. Barg and W. Drobetz)
Abstract: The valuation of start-up firms is challenging, yet highly relevant for entrepreneurs and financiers alike. We reverse-engineer fair-value multiples by comparing the firm value at the time of financing with the firm value at the time of exit. Our framework produces reliable valuation multiples from observed venture capital transactions per industry and financing round. Despite their simplicity, sanity checks confirm that our multiples are highly performant in describing common valuation characteristics. Valuation multiples are higher when more experienced investors are involved, and when the exit occurs through an IPO rather than an M&A. In contrast, later stage financing rounds and larger investment consortia are associated with lower valuation multiples. [working paper version here]
PLOS ONE, 2020
→ Coverage: European Parliament
Abstract: This paper examines the market for initial coin offerings (ICOs). ICOs are smart contracts based on blockchain technology that are designed for entrepreneurs to raise external finance by issuing tokens without an intermediary. Unlike existing mechanisms for early-stage finance, tokens potentially provide investors with rapid exit opportunities thanks to liquid trading platforms. The marketability of tokens offers novel insights into entrepreneurial finance, which I explore in this paper. First, I document that investors earn on average 8.2% on the first day of trading. However, about 40% of all ICOs destroy investor value on the first day of trading. Second, I explore the determinants of market outcomes and find that management quality and the ICO profile are positively correlated with the funding amount and returns, whereas highly visionary projects have a negative effect. Among the 21% of all tokens that get delisted from a major exchange platform, highly visionary projects are more likely to fail, which investors anticipate. Third, I explore the sensitivity of the ICO market to adverse industry events such as China’s ban of ICOs, the hack of leading ledgers, and the marketing ban on FaceBook. I find that the ICO market is highly susceptible to such environmental shocks, resulting in substantial welfare losses for investors. [working paper version here]
Journal of Corporate Finance, 2020 (with G. Dissanaike and W. Drobetz)
→ Nominated for best paper award (Financial Management Association)
Abstract: Merger control exists to help safeguard effective competition. However, findings from a natural experiment suggest that regulatory merger control reduces the profitability of corporate acquisitions. Uncertainty about merger control decisions reduces takeover threats from foreign and very large acquirers, therefore facilitating agency-motivated deals. Valuation effects are more pronounced in countries with stronger law enforcement and in more concentrated industries. Our results suggest that competition policy may impede the efficiency of the M&A market. [working paper version here]
Journal of Corporate Finance, 2020 (with W. Drobetz)
Abstract: New evidence from acquisition decisions suggests that antitakeover provisions (ATPs) may increase firm value when internal corporate governance is sufficiently strong. We document that, in Germany, firms with stronger ATPs, and particularly supermajority provisions, are better acquirers. Managers of high-ATP firms create value in acquisitions by making governance-improving deals. They are more likely to engage in acquisitions that reduce their own entrenchment level and less likely to invest in declining industries. Further, our empirical evidence is consistent with a short-termist interpretation. We show that takeover threats can induce myopic investment decisions, which ATPs can mitigate. They also lead managers to engage more often in value-creating long-term and innovative investing, and increase their sensitivity to investment opportunities. Our findings contribute to a growing literature challenging conventional wisdom that the agency-increasing effect of ATPs empirically dominates the myopia-eliminating effect, suggesting that a more contextual view of the value implications of ATPs is necessary. [working paper version here]
Journal of Corporate Finance, 2020 (with C. Fisch)
Abstract: We examine the role of institutional investors in Initial Coin Offerings (ICOs). Taking a financial investor’s perspective, we assess the determinants of post-ICO performance via buy-and-hold abnormal returns in a sample of 565 ICO ventures. Conceptually, we argue that institutional investors’ superior screening (selection effect) and coaching abilities (treatment effect) enable them to partly overcome the information asymmetry of the ICO context and extract informational rents from their ICO investments. We find that institutional investor backing is indeed associated with higher post-ICO performance. Disentangling the selection and treatment effects econometrically, we find that both of these effects explain the positive impact on post-ICO per-formance. Overall, our results highlight the importance of institutional investors in the ICO context. [working paper version here]
Journal of Business Venturing, 2021
→ Coverage: The Economist
Abstract: This paper provides the first evidence of a moral hazard in signaling in an entrepreneurial finance context, by examining token offerings or Initial Coin Offerings (ICOs). Entrepreneurs ability to signal quality is crucial to succeeding in the competition for growth capital. However, the absence of institutions that verify endogenous signals may induce a moral hazard in signaling. Consistent with this hypothesis, artificial linguistic intelligence indicates that token issuers systematically exaggerate information disclosed in whitepapers. Exaggerating entrepreneurs raise more funds in less time, suggesting that investors do not see through this practice initially. Eventually, the crowd learns about the exaggeration bias through trading with other investors. The resulting investor disappointment causes the cryptocurrency to depreciate and the probability of platform failure to increase. [working paper version here]
Strategic Management Journal, 2021
Abstract: CEO emotions are difficult to measure and hence empirically understudied. However, using artificial emotional intelligence, positive and negative affects can be identified from facial muscle contraction-relaxation patterns obtained from public CEO photos during initial coin offerings (ICOs), i.e., blockchain-based issuances of cryptocurrency tokens to raise growth capital. The results suggest that CEO affects impact firm valuation in two ways. First, CEOs’ own firm valuations conform more to those of industry peers if negative affects are pronounced (conformity mechanism). Second, investors use CEO affects as signals about firm value and discount when negative affects are salient (signaling mechanism). Negative affects can reduce firm value by up to 15%. Both mechanisms are stronger in the presence of asymmetric information. [working paper version here]
Journal of Corporate Finance, 2021 (with G. Dissanaike, W. Drobetz, J. Rocholl)
→ Lead Article
→ Nominated for best paper award (Financial Management Association)
Abstract: This paper examines the impact of takeover law enforcement on corporate acquisitions. We use the European Takeover Directive as a natural experiment, which harmonizes takeover law across countries, while leaving its enforcement to the discretion of individual countries. We exploit this heterogeneity in enforcement quality across countries in a difference-in-differences-in-differences model, while employing an overall inductive research approach, following the recommendation in Karpoff and Whittry (2018). We find that acquirer returns increase in countries with changes in takeover law, driven by improved target selection and lower cost of financing. The increase in acquirer returns is lower in weak enforcement jurisdictions, which we identify by developing a novel Takeover Law Enforcement Index (TLEI). The findings show that takeover law can mitigate agency conflicts, but its true value depends on its enforcement. Our results are robust to a number of robustness tests. [working paper version here]
Strategic Entrepreneurship Journal, 2022 (with M. G. Colombo, C. Fisch, S. Vismara)
→ Most Cited Paper Award at Strategic Entrepreneurship Journal 2024
→ SEJ/Wiley 2022 top cited paper award
Abstract: How do top executives’ physical attributes impact firm value? Our study combines Upper Echelons Theory (UET) with insights from social psychology and labor economics to investigate how Chief Executive Officers’ (CEOs’) facial attractiveness influences firm valuation by investors in Initial Coin Offerings (ICOs). We document a pronounced CEO beauty premium. The positive relationship between CEO attractiveness and firm valuation is not driven by stereotype-based evaluations; that is, investors do not mistake attractiveness for other latent traits, such as competence, intelligence, likeability, or trustworthiness. Rather, CEO attractiveness seems to bear economic value per se. It helps attract institutional investors and has a sustainable effect on token price performance. Our results are immune to recall and confirmation biases, reverse causality, and unobserved heterogeneity. [working paper version here]
Journal of Business Venturing, 2022 (with S. Mansouri)
→ WAIFC 2022 Best Paper Award
→ EBS Best Paper Award 2023
→ Academy of Management 2023 Best Paper Award on Sustainable Entrepreneurship sponsord by the Ewing Marion Kauffman Foundation
Abstract: Sustainability orientation has a positive effect on startups’ initial valuation and a negative effect on their post-funding financial performance. All else equal, improving sustainability orientation by one standard deviation increases startups’ funding amount by 28% and decreases investors’ abnormal returns per post-funding year by 16%. The results hold in a large sample of blockchain-based crowdfunding campaigns, also known as Initial Coin Offerings (ICOs) or token offerings. A key contribution is our a machine-learning approach to assess startups’ Environment, Society and Governance (ESG) properties from textual data, which we make readily available at www.SustainableEntrepreneurship.org. [working paper version here]
Economics Letters, 2023 (with N. Dombrowski, W. Drobetz)
Abstract: Crypto funds (CFs) are a growing intermediary in cryptocurrency markets. We evaluate CF performance using metrics based on alphas, value at risk, lower partial moments, and maximum drawdown. The performance of actively managed CFs is heterogenous: While the average fund in our sample does not outperform the overall cryptocurrency market, there seem to be some few funds with superior skills. Given the non-normal nature of fund returns, the choice of the performance measure affects the rank orders of funds. Compared to the Sharpe ratio, the most commonly applied metric in practice, performance measures based on alphas and maximum drawdown lead to diverging fund rankings. Depending on their ranking of preferences, CF investors should thus consider a bundle of metrics for fund selection and performance measurement. [working paper version here]
Small Business Economics, 2024
Abstract: This paper examines the efficiency of the Initial Coin Offering (ICO) market through a search-theoretical lens. Search intensity associated with the process of identifying valuable startups is increasing in market granularity. Blockchain technology increases market granularity because asset tokenization lowers entry barriers. Lower-end entrants, however, increase aggregate search intensity but may lack search skills. The resulting search-related inefficiency creates a niche for intermediaries or institutional investors that specialize on search. Consistent with the theory, specialized crypto funds increase ICO market efficiency by reducing search frictions, inter alia, by shortening the time-to-funding and increasing the funding amount. At the same time, crypto funds extract sizable economic rents for their intermediation services. Overall, the study relates to the general trade-off between centralization and decentralization in entrepreneurial finance. It suggests that market frictions specific to early-stage crowdfunding of entrepreneurship may prevent perfectly Decentralized Finance (DeFi) markets from functioning efficiently. [working paper version here]
PLOS ONE, 2024 (with D. Audretsch, C. Fisch, C. Franzoni, S. Vismara)
→ Coverage: European Union, European Parliament, LSE Impact Blog, Academe Blog, Research Europe, ProMarket, George J. Stigler Center for the Study of the Economy and the State, University of Chicago
Abstract: Academic freedom is a critical norm of science. Despite the widely postulated importance of academic freedom, the literature attests to a dearth of research on the topic. Specifically, we know little about how academic freedom relates to indicators of societal progress, such as innovation. We address this research gap by empirically assessing the impact of academic freedom on the quantity (patent applications) and quality (patent citations) of innovation output using a comprehensive sample of 157 countries over the 1900–2015 period. We find that improving academic freedom by one standard deviation increases patent applications by 41% and forward citations by 29%. The results are robust across a range of different specifications. Our findings constitute an alarming plea to policymakers: global academic freedom has declined over the past decade for the first time in the last century and our estimates suggest that this decline poses a substantial threat to the innovation output of countries in terms of both quantity and quality. [working paper version here]
Small Business Economics, 2024 (with I. Parra Oller)
Abstract: Sustainability practices have a positive effect on the financial performance of SMEs. We extract ESG-related information for a sample of Spanish SMEs over the period 2012-2022 using tools provided by the Internet Archive to estimate a staggered difference-in-differences model of how the release of new ESG-related information impacts the financial performance of SMEs. ESG-related information can be delivered as an endogenous signal or as an exogenous certification. We show that both types of ESG-related information have a positive effect on SME financial performance, and that both are informational substitutes. We also show that institutional change in the form of the 2015 Paris Agreement on Climate Change moderated the sustainability-performance relation. Specifically, post-Paris, the value-creating impact of exogenous ESG certification increased, while endogenous ESG signals without external certification became ineffective or detrimental. Finally, in line with CSR-as-insurance theory, we show that SMEs with higher performance variability benefit more from sustainability orientation. [working paper version here]
Journal of Business Venturing Insights, 2024 (with W. Drobetz, S. El Ghoul, O. Guedhami, J. Hackmann)
Abstract: Institutional investors improve the environmental, social, and governance (ESG) performance of small- and medium-sized enterprises (SMEs). Our difference-in-differences framework shows that the backing from private equity and venture capital funds leads to an increase in SMEs’ externally validated ESG scores compared to their matched non-investor-backed peers. Consistent with “ESG-as-insurance” theory, the ESG performance of SMEs with a higher probability of failure is more likely to benefit from the backing of institutional investors. This positive effect is heterogeneous; while SMEs with high ex-ante ESG performance tend to further improve their ESG performance following institutional investor backing, SMEs with low ex-ante ESG performance are unlikely to implement any improvements. Entrepreneurial finance seems to help sustainable entrepreneurs to develop into “sustainability champions,” while neglecting the betterment of non-sustainable SMEs. [working paper version here]
Journal of Business Venturing Insights, 2025 (with C. Bellavitis)
Abstract: Decentralized autonomous organizations (DAOs) crowdfunds to invest in various projects. The decentralization feature of DAOs submits that decision-making is a collective democratic action of all DAO members. The autonomy feature of DAOs suggests that decision-making is an algorithmic process governed by self-executing smart contracts. However, in reality, DAOs are neither perfectly decentralized nor completely autonomous. Our empirical analysis shows that deviations from the ideals of decentralization and autonomy are costly. Non-algorithmic off-chain voting governance of decision-making leads to a substantial discount in DAO value. Non-decentralized aspects such as large voting coalitions also affect DAO value. Interaction effects are also shown. The study implies that platform governance design choices are crucial for DAO success. [working paper version here]
Entrepreneurship Theory and Practice, 2025 (with W. Drobetz, L. Hornuf, N. Schermann)
→ Coverage: Oxford Business Law Blog
Abstract: What role does the selection of an investor and the timing of financing play in initial coin offerings (ICOs)? We investigate the operating and financial performance of ventures conducting ICOs with different types of investors at different points in the venture life cycle. We find that, relative to purely crowdfunded ICO ventures, institutional investor-backed ICO ventures exhibit poorer operating performance and fail earlier. However, conditional on their survival, these ventures financially outperform those that do not receive institutional investor support. The diverging effects of investor backing on financial and operating performance are consistent with our theory of certification arbitrage; i.e., institutional investors use their reputation to drive up valuations and quickly exit the venture post-ICO. Our findings further indicate that there is an inverted U-shaped relationship for fundraising success of ICO ventures over their life cycle. Another inverted U-shaped relationship exists for the short-term financial performance of ICO ventures over their life cycle. Both the fundraising success and the financial performance of an ICO venture initially increase over the life cycle and eventually decrease after the product piloting stage. [working paper version here]
Journal of Business Venturing, 2025 (with D. Cumming, W. Drobetz, N. Schermann)
→ Coverage: Duke Law School FinReg Blog, Columbia Law School BlueSky Blog
Abstract: Coordination frictions prevent the efficient adoption and governance of blockchain-based platforms. Crypto funds (CFs) create value by smoothing frictions on decentralized digital platforms (DDPs). CF-backed DDPs obtain higher valuations in the primary token market, outperform their peers after issuing tokens, and benefit from token price appreciation around CF investment disclosure in the secondary market. Primary transaction data from the Ethereum ledger shows that the valuations of DDPs with meager adoption and a higher centralization of token ownership benefit more from CF backing. The positive valuation and performance effects for CF-backed DDPs are more pronounced for CFs that are more central in investor networks. [working paper version here]
Economics Letters, 2025 (with V. Lo Monaco and S. Vismara)
Abstract: Distributed governance mechanisms increase tokenholder value in decentralized autonomous organizations (DAOs) when decision-making is contested. Using a comprehensive dataset of proposals voted on within blockchain-based DAOs from 2020 to 2024, we exploit a regression discontinuity design on proposals that pass or fail by a close margin around the majority threshold. Local average treatment effects indicate that proposal passage increases DAO token returns by 4.7% at the margin. Further, a one standard deviation increase in vote participation amplifies this effect by 2.2%. Proxies for democratization and decentralization also increase the value-creating effect of contested decision-making in DAOs. Our findings contribute to understanding how distributed governance structures create value in digital organizations. [working paper version here]
Journal of Banking & Finance, 2025 (with L. Hornuf, R. Nam, Y. Yuan)
→ Coverage: Decrypt, CoinTribune, Duke Law School
→ Best Paper Awards: PDW for Financial Market Misconduct SI in the Journal of Banking and Finance, British Academy of Management, IHS at George Mason University
Abstract: We examine how cybercrime impacts victims’ risk-taking and returns. Our difference-in-differences analysis of a sample of victims and matched non-victims is in line with prospect theory and suggests that victims increase their long-term total risk-taking after losing part of their wealth. Victims also earn lower risk-adjusted returns in the post-cybercrime period. Victims’ long-term total risk-taking increases because they increase diversifiable risk in the long term. The increased diversifiable risk correlates with victims’ withdrawal from altcoins after cybercrime. At the same time, the reduction in risk-adjusted returns correlates with increased trading activity and churn, due plausibly to managing cybercrime exposure. In the cross-section of Ethereum addresses, we show that the most affluent victims take a systematic approach to restore their pre-cybercrime wealth level, while the least affluent victims turn into gamblers. Finally, a parsimonious forensic model explains a good part of the addresses’ probability of being involved in cybercrime, on both the victim and the cybercriminal side. [working paper version here]
Journal of Business Research, 2026 (with M. Hirschmann, C. Fisch)
Abstract: Violent conflict is a pervasive feature of human history, with profound implications for individuals, communities, and economies. The disruptions violent conflict causes reshape the conditions under which entrepreneurship emerges and evolves. In its aftermath, entrepreneurship may function as a coping mechanism and a vehicle for recovery. However, entrepreneurship is also constrained by altered opportunity structures, disrupted labor markets, heightened uncertainty, and weakened institutions. Drawing on institutional and social cognitive theory, we examine how violent conflict influences the likelihood and type of entrepreneurship. We combine Global Entrepreneurship Monitor data (n = 1,485,332; 90 countries, 2009–2021) with Global Peace Index scores in a multilevel design. Our results show that violent conflict reduces overall entrepreneurial engagement but increases the prevalence of necessity (vs. opportunity) entrepreneurship in a country, with socio-cognitive characteristics as moderators. Our findings are robust to alternative conflict indicators, offering nuanced theoretical contributions and actionable policy guidance for resilience-building in conflict settings. [working paper version here]
Economics Letters, 2026
Abstract: We examine how labor representation on corporate boards affects innovation. Exploiting German co-determination law, which requires one-third (one-half) labor-elected directors in firms above 500 (2,000) employees, we implement a regression discontinuity design using administrative employer-inventor-patent data. Crossing either threshold raises innovative productivity, measured as the forward citation-weighted number of patents per firm, by about 20-25%. This increase is driven by more patents, while forward citations do not rise and decline significantly at the parity cutoff, indicating a shift toward more incremental, less path-breaking inventions. Additional evidence shows that labor-controlled firms insure workers against adverse labor market shocks, lengthen inventors’ employment spells, and offer wage incentives that reward patent quantity rather than quality. Overall, labor representation expands the number of patented inventions but dilutes their average citation impact, reallocating innovative effort in labor-controlled firms from path-breaking to incremental projects. [working paper version here]
Small Business Economics, 2026
Abstract: Non-Practicing Entities (NPEs) have been characterized as either (1) "patent trolls" who are self-serving agents that extract and appropriate the social value of inventions for private gain or (2) "benign middlemen" who may increase social welfare by facilitating commercialization for upstream inventions to resource-constrained inventors. This paper proposes a third view: NPEs as financial intermediaries that may improve the efficiency of technology markets by reducing patent market frictions. Using proprietary transaction-level data from Silicon Valley’s novel brokered patent market (BPM), we estimate a standard search-and-bargaining model to quantify NPEs’ contributions to patent market efficiency and the underlying mechanisms. The results suggest that Silicon Valley’s BPM is relatively inefficient for two reasons. First, there is misallocative inefficiency; that is, the market regularly fails to reallocate patents to the entity with the highest valuation. Reasons include search (buyer/seller matching), trading (time to transaction), and bargaining (rent sharing) frictions. Second, there is mispricing-related inefficiency; that is, transaction prices are below the "fair value" due to these frictions. Importantly, we find that NPEs play an ambiguous role for the efficiency of Silicon Valley’s BPM. On the one hand, NPEs reduce trading frictions; on the other, NPEs exacerbate search and bargaining frictions. In particular, transaction surplus sharing is highly asymmetric to the advantage of NPEs and disadvantage of inventors, which curtails the welfare contribution of Silicon Valley’s BPM to society. The study suggests that policymaking would benefit from a more nuanced view on NPE activity. [working paper version here]
Journal of Business Research, 2026 (with J. Hackmann)
Abstract: Our variance decomposition of corporate environmental performance shows that production and non-production factors account for equal parts of the variance in non-greenhouse gas toxicity-adjusted chemical emissions (TACE). Variance differences suggest that emission responsibility is delegated down to production managers in U.S. firms vis-à-vis up to industry associations in European firms. We derive the novel measure of peer-adjusted abnormal TACE from the variance decomposition to quantify corporate excess emissions. A one-standard-deviation increase in peer-adjusted abnormal TACE reduces return on equity (ROE) by 2.6 to 2.9 percentage points. A difference-in-differences analysis of the staggered enactment of environmental detoxification regulations supports a causal interpretation. Several moderation tests indicate that environmental policy uncertainty, resource scarcity, and ESG commitments explain cross-sectional heterogeneity in the environmental-financial performance relation. Our results are consistent with the conjecture that firms with excessive TACE experience diminished ROE due to reduced legitimacy, increased stakeholder pressures, and resulting operational and financing frictions. [working paper version here]
Review of Corporate Finance, 2026
Abstract: Decentralized finance (DeFi) has emerged as a significant financial innovation, using blockchain technology and smart contracts to replicate and expand traditional financial services without intermediaries. This review synthesizes the literature across seven dimensions: token financing, trading and liquidity, cryptocurrency as an asset class, governance, risk, monetary system implications, and infrastructure. We identify several key findings: tokens solve coordination problems but face design trade-offs; cryptocurrency markets exhibit distinct risk factors, yet most price volatility reflects beliefs rather than fundamentals; decentralization is partial and endogenous, with concentration emerging in mining, staking, and governance; novel risks including stablecoin fragility and MEV extraction require new frameworks; and infrastructure constraints shape feasible applications. We conclude by proposing directions for future research. [working paper version here]
Research Policy, 2026 (with D. Audretsch, W. Drobetz, E.Ernst, S. Vismara)
Abstract: Schumpeterian arguments of creative destruction predict that innovation is countercyclical. However, empirical findings demonstrate the contrary. We apply corporate finance principles to innovation economics and propose a hurdle-rate theory of inventive procyclicality. Macroeconomic episodes of high equity risk premia (ERP) hinder innovation in our 1977-2018 sample of U.S. firms because many R&D projects fail to pass corporate budgeting decisions when the aggregate discount rate is high. We exploit the staggered variation in state-level R&D tax credits in difference-in-differences analyses to establish a causal link between the ERP and patent value. In line with our hurdle-rate theory, we show that high-ERP episodes hurt those firms more that focus on exploratory search than their exploitative counterparts. Consistent evidence suggests that the hurdle rate effect is less pronounced in firms with financial slack, weak product market competition, and high institutional investor ownership. [working paper version here]
Journal of International Business Studies, conditionally accepted 2026 (with W. Drobetz, S. El Ghoul, O. Guedhami, M. Kolbe)
→ Best Paper Award from Entrepreneurial Finance Association for a doctoral student-presented paper
→ Best Paper Award from the Chartered Alternative Investment Association (CAIA)
Abstract: Using a sample of 23,563 privately held companies owned by 1,465 private equity funds from around the world, we provide evidence that fund returns are lower when the fund’s portfolio companies are exposed to environmental, social and governance (ESG) risks. Although this negative risk-return relationship challenges the traditional finance axiom that returns compensate for risk, we explain our results using institutional theory from the international business literature. Failure to comply with formal and informal ESG institutions undermines the normative legitimacy of portfolio companies, resulting in lower returns at the fund level through normative sanctioning. A higher cultural distance of a fund’s headquarters from its portfolio companies (our measure of liability of foreignness) exacerbates the return penalty for earlystage venture funds (due to their liability of newness), but mitigates it for later-stage buyout funds. Limited cognitive or regulative legitimacy, due to investments in early-stage venture companies or countries with poor formal ESG institutions, exacerbates the negative effect of ESG risk-taking on fund returns, driven by a strong reliance on normative legitimacy. Reduced reliance on normative legitimacy, as seen in "sin"-sectors, mitigates the valuation effect. Finally, normative sanctioning is stronger as more economic and financial resources are available. Our study makes a contribution to the international business literature by linking research on crossborder private equity and sustainability. It also provides important practical insights. [working paper version here]
Published:
This is the econometrics module that I taught in the PhD program at Hamburg Business School, University of Hamburg, Germany in 2018. Read more
Published:
Work in progress (with A. Bernardo, I. Welch)
Abstract: Our paper estimates that shares in Private Investments in Public Equity (PIPEs) offered a discount of 3-4% for each year during which these shares could not be resold. Our estimates make use of the duration of the resale restriction and information about the effects of a regulatory change. In 2008, the SEC amended Rule~144 to shorten the default statutory holding period. Our estimates are smaller than previous estimates and robust to various controls and endogeneity concerns. The discount can be twice as large in offerings in which marketability is a greater concern.
Published:
Minor R&R at Journal of Banking and Finance (with H. Urban)
Abstract: [Title and abstract modified for anonymity.] We propose a novel ML/AI approach to improve return prediction for cryptocurrencies. Our approach is much simpler than existing methods and yet achieves twice the alpha of comparable models. We also theoretically justify the statistical outperformance of our model.
Published:
R&R at Journal of Business Venturing (with F. Xia, J. Thewissen, and S. Yan)
Abstract: We show that sustainability segments entrepreneurial finance markets by investor types in token-based crowdfunding, a market that is populated by individual and institutional investors alike. While ventures backed by institutional investor do not (need to) emphasize environmental, social, and governance (ESG) ambitions, non-backed ventures raising funds from masses of individual contributors display salient ESG orientations, with a disproportiantely pronounced governance dimension. ESG helps ventures unsuccessful in securing institutional investments partially compensate for the funding disadvantage, as individuals exhibit higher willingness-toinvest in sustainable ventures. Using artificial intelligence to separate ESG orientations into two latent sources, substantive and symbolic, we find that symbolic ESG is more prevalent in non-backed ventures, potentially suggesting "greenwashing." The startup valuations of individual investors are affected by substantive and symbolic ESG orientations, although symbolic claims do not compensate for the lack of institutional certification. Overall, sustainability-driven market segmentation is in line with the conjecture that individual investors perceive sustainability as a legitimization substitute for ventures that lack certification from institutional investors.
Published:
(with J. Wiklund, Y. Yuan)
Abstract: Information asymmetries shape the (in)efficiency of entrepreneurial finance markets. We introduce a distinction between information-endowment asymmetry (unequal access to signals) and information-utilization asymmetry (unequal processing of signals). Our study explores whether the onset of generative artificial intelligence (AI) improves "signal conversion efficiency" in entrepreneurial finance; i.e., the effective utilization of the information endowment. Empirically, we engineer an AI agent that utilizes the information endowment in blockchainbased crowdfunding campaigns to generate investment recommendations, and compare those to recommendations by human experts and a human-built recommendation algorithm. Among all major signals of capital formation in blockchain-based crowdfunding, our AI agent’s advice outperforms statistically and economically: Including our AI agent’s advice as a signal for capital formation raises R-squared by up to 35%, and a one-standard-deviation increase in AI recommendation strength is associated with 48% higher funding amounts. Explainable AI in the form of Shapley values corroborates AI’s superior predictive power. Consistent with our signal conversion efficiency conjecture, we also find that AI-human advice congruence is positively associated with capital formation, while AI-human advice divergence predicts lower funding amounts if investment recommendations by humans are more optimistic than those by AI, highlighting the practical potential of AI as a corrective device for human biases in investment decisions.
Published:
R&R at Journal of Business Venturing (with J. Hackmann)
Abstract: [Title and abstract amended for anonymity.] We study how DEI impacts investement outcomes in private capital markets.
Published:
Rej&R at Strategic Entrepreneurship Journal
Abstract: New Venture Teams’ (NVTs’) collective emotions impact startup valuations through their intensity and diversity. I identify NVTs’ affective traits with artificial emotional intelligence by tracking 2,520 individuals across 165 NVTs during their Initial Coin Offerings (ICOs). The level of NVTs’ negative affects correlates with lower valuations, while within-NVT emotional diversity has a value-increasing effect. Intuitively, negative affects are associated with traits that may be prejudicial in dynamic entrepreneurial markets, but could be valuable if balanced by opposite traits in emotionally diverse NVTs. Moderated mediation analyses suggest that NVT affects have pronounced direct valuation effects. Overall, I extend the focus of the affective entrepreneurship literature from the entrepreneur to the team level, introduce the concept of emotional diversity, and explore the role of emotions in entrepreneurial finance.
Published:
R&R at Entrepreneurship Theory and Practice (with D. Audretsch, H. Motuzenko, S. Vismara)
→ Coverage: R&D Today, LSE Business Review, Vox Ukraine
Abstract: This synthetic control study quantifies the economic costs of the Russo-Ukrainian war in terms of foregone entrepreneurial activity in both countries since the invasion of Crimea in 2014. Relative to its synthetic counterfactual, Ukraine’s number of self-employed dropped by 675,000, corresponding to a relative loss of 20%. The number of Ukrainian SMEs temporarily dropped by 71,000 (14%) and recovered within five years of the conflict. In contrast, Russia had lost more than 1.4 million SMEs (42%) five years into the conflict. The disappearance of Russian SMEs is driven by both fewer new businesses created and more existing business closures.
Published:
Rej&R at Strategic Entrepreneurship Journal (with J. Fuchs)
Abstract: After initial coin offerings (ICOs), decentralized digital platforms (DDPs) decide whether to go public or remain private. We explore the implications of the public-versus-private decision for the growth and decentralization of DDPs. Employing a difference-indifferences framework, we find that public DDPs scale faster post-listing relative to matched private DDPs. An important driver behind public DDPs’ superior growth is a spillover effect of financial speculation on fundamental platform activity, especially when DDPs are undervalued, hastening network effects. The going-public decision also facilitates DDP decentralization, although this stems mostly from the left tail of the token ownership distribution, while blockholders largely remain in control. Exploring the trade-off between going public through token exchange listings and remaining private with the help of institutional investors, we find that crypto fund-endorsed token listings yield more platform growth than unendorsed listings, while crypto fund backings without listings create the least value. Overall, our study suggests that early-stage startups may economically benefit from tokenization and creating liquid markets for venture tokens.