scholarly journals Movers and Shakers*

2016 ◽  
Vol 131 (4) ◽  
pp. 1849-1874 ◽  
Author(s):  
Robert Akerlof ◽  
Richard Holden
Keyword(s):  
Venture Capital ◽  
Investment Project ◽  
Social Connections ◽  
Total Capital ◽  
Private Signals ◽  
Ex Ante ◽  
Winning Bidder ◽  
Do So

Abstract Most projects, in most walks of life, require the participation of multiple parties. While it is difficult to unite individuals in a common endeavor, some people, who we call “movers and shakers,” seem able to do it. The article specifically examines moving and shaking of an investment project, whose return depends on its quality and the total capital invested in it. We analyze a model with two types of agents: managers and investors. Managers and investors initially form social connections. Managers then bid to buy control of the project, and the winning bidder puts effort into making investors aware of it. Finally, a subset of aware investors are given the chance to invest and they decide whether to do so after receiving private signals of the project’s quality. We first show that connections are valuable since they make it easier for a manager to “move and shake” the project (i.e., obtain capital from investors). When we endogenize the network, we find that while managers are identical ex ante, a single manager emerges as most connected; he consequently earns a rent. In extensions, we move away from the assumption of ex ante identical managers to highlight forces that lead one manager or another to become a mover and shaker. Our theory sheds light on a range of topics, including entrepreneurship, venture capital, and anchor investments.

scholarly journals Unequal chances: ex ante fairness and individual control

2020 ◽  
Vol 10 (1) ◽  
Author(s):  
Leticia Micheli ◽  
Nickolas Gagnon
Keyword(s):  
Perceived Control ◽  
Online Survey ◽  
Family Income ◽  
Financial Outcomes ◽  
Individual Control ◽  
Ex Ante ◽  
And Gender ◽  
Different Sources ◽  
Do So

AbstractUnequal financial outcomes often originate from unequal chances. Yet, compared to outcomes, little is known about how individuals perceive unequal distributions of chances. We investigate empirically the role of different sources of unequal chances in shaping inequality perceptions. Importantly, we do so from an ex ante perspective—i.e., before the chances are realized—which has rarely been explored. In an online survey, we asked uninvolved respondents to evaluate ex ante the fairness of unequal allocations of chances. We varied the source of inequality of chances, using a comprehensive range of factors which resemble several real world situations. Respondents also evaluated how much control individuals hold over the distribution of chances. Results show that different sources generate different ex ante perception of fairness. That is, unequal chances based on socioeconomic and biological factors, such as gender, family income and ethnicity, are evaluated to be unfair relative to the same chances based on effort, knowledge, and benevolence. Results also show that, for most individuals, there is a positive correlation between perceived control of a factor and fairness of unequal chances based on that factor. Luck appears to be an exception to this correlation, ranking as high in fairness as effort, knowledge, and benevolence, but similarly low in individual control as ethnicity, family income, and gender.

The Psychological Dimensions and the Social Consequences of Incarceration

2013 ◽  
Vol 651 (1) ◽  
pp. 122-138 ◽  
Author(s):  
Jason Schnittker
Keyword(s):  
Psychological Factors ◽  
Social Consequences ◽  
Social Connections ◽  
Criminal Record ◽  
Representative Survey ◽  
The Social ◽  
Nationally Representative ◽  
Psychological Dimensions ◽  
Do So ◽  
Former Inmates

This article explores the psychological costs of incarceration, with a particular focus on how psychological factors are related to the social and economic difficulties of reentry. Using descriptive information from a nationally representative survey, this study reveals considerable anxiety, fear, and uncertainty among former inmates. The evidence also reveals that psychiatric disorders are, in some cases, even more disabling among former inmates than among others. The article situates this evidence within the larger debate on the social consequences of incarceration and discusses its implications. Psychological factors are certainly not the only barriers former inmates will face, but they are neglected in the literature and play an important role in how former inmates respond to other difficulties. They are also at the center of a persistent dilemma: former inmates must establish social connections upon release, but they must do so while harboring the stigma of a criminal record. Furthermore, former inmates who have a psychiatric disorder may be particularly disadvantaged because they experience two stigmas simultaneously.

scholarly journals A Crisis of Faith & the Scientific Future of Patent Theory

2018 ◽  
Author(s):  
Oskar Liivak
Keyword(s):  
Technology Transfer ◽  
Patent System ◽  
Crisis Of Faith ◽  
Ex Ante ◽  
Do So

90 St. John's Law Review 639 (2016)The current reward framing for the patent system has resisted all attempts to either confirm or to refute the benefits of the system. Yet that should not surprise us. We should be surprised that we ever thought that the system could be justified at all. The reward framing has infected the patent system with pathological defects that make the system both unjustifiable and unfalsifiable. An alternate framing that focuses on ex ante technology transfer can support and explain many of the doctrinal features of the current patent system, but it can do so while avoiding the pathologies that plague today's patent theory.

Do Venture Capital Firms Play as Supportive Mentors or Free-riders? Evidence from China

2017 ◽  
Vol 22 (4) ◽  
Author(s):  
Xi Yang ◽  
Su-Sheng Wang
Keyword(s):  
Venture Capital ◽  
Performance Enhancement ◽  
Random Effect ◽  
Sample Selection ◽  
Superior Performance ◽  
Entrepreneurial Firms ◽  
Ex Post ◽  
Ex Ante ◽  
Venture Capital Firms ◽  
Passive Investors

This paper aims to investigate whether Venture Capital Firms in China play as active investors, who seize to provide the funded entrepreneurial firms monitoring assistance and value-adding service for the performance enhancement, or just act as passive investors, who care little about the growth of the funded firms but the opportunity of freeriding on the IPO process to gain fast and huge economic rents. Utilizing the panel data of listed companies on the Chinese SME Board, this paper employs the PSM methodology and the panel regression models with random effect to control the sample selection bias, and disentangle VC firm’s ex-ante screening effect from the ex-post effect. The analysis reveals that Venture Capital firms are able to select the entrepreneurial firms with superior performance before the first round of VC investment, but fail to enhance the development of funded ventures after the involvement. Although the venture backed firms present the performance superiority over the non-venture backed peers overall, this difference is just attributed to VC firm’s ex-ante screening effects. VC firms do not demonstrate the ex-post value-adding effect, rather to some extent they even exert hampering effect on the performance of funded firms after the investment was made.

Hypergrowth Exit Mindset: Destroying Societal Wellbeing through Venture Capital Biased Social Construction of Value

2020 ◽  
Vol 29 (4) ◽  
pp. 471-474
Author(s):  
Laura Lam ◽  
Marc-David L. Seidel
Keyword(s):  
Social Construction ◽  
Venture Capital ◽  
Research Area ◽  
Exit Strategy ◽  
Innovation Ecosystems ◽  
Socially Constructed ◽  
Laser Focus ◽  
Antecedents And Consequences ◽  
Do So

Exit! Exit! Exit! Our innovation ecosystems are focused on this goal above all else, thanks to the reliance on venture capital. Young potential entrepreneurs talk about exit strategies before even creating an innovation or starting a business. Our innovation ecosystems push them to do so in many ways. Seemingly straightforward questions to budding entrepreneurs such as “What is your exit strategy?” drastically shift focus and outcomes away from creating long–term societally beneficial innovations. We argue that this hypergrowth exit mindset is destroying societal wellbeing due to its laser focus on increasing socially constructed exit value above all else. As a field we need much more research about the antecedents and consequences of the mindset, as well as research informed alternative innovation models. To address this fertile research area, we call for more research on alternative models of innovation built upon societal wellbeing as opposed to exit valuations.

scholarly journals Nudging und soziales Engagement: Wie kann Nudging dazu beitragen, die Spendenbereitschaft zu erhöhen?

2018 ◽  
Vol 87 (2) ◽  
pp. 139-152
Author(s):  
Adena Maja
Keyword(s):  
Social Engagement ◽  
Field Experiments ◽  
Status Quo ◽  
Large Field ◽  
Design Decisions ◽  
Ex Ante ◽  
The Status ◽  
Context Dependent ◽  
Do So

Zusammenfassung: Nudging hat das Potential, soziales Engagement zu erhöhen. In diesem Beitrag wird ausgehend von einigen Feldexperimenten diskutiert, wie vorgegebene Standards, Anker, Erinnerungen und weitere Methoden des Nudgings die Entscheidung, Geld für wohltätige Zwecke zu spenden, verändern können. So beeinflussen zum Beispiel nicht bindende Empfehlungen bezüglich der Spendenhöhe die Höhe der tatsächlich gespendeten Beträge. Einige Individuen entscheiden sich dann eher dafür, genau den empfohlenen und nicht einen anderen Betrag zu spenden. Dabei erhöhen einige ihre Spende, während andere sie verringern. Außerdem spenden mehr Personen, wenn die Empfehlung relativ niedrig ist, und weniger, wenn sie relativ hoch angesetzt wird. Insgesamt kann es deshalb durch eine empfohlene Spendenhöhe genauso gut zu einer Erhöhung wie zu einer Verringerung des insgesamt erzielten Spendenaufkommens kommen. Im Beitrag wird argumentiert, dass die Entscheidungen für ein bestimmtes Spendendesign nicht einfach sind und den jeweiligen Kontext berücksichtigen sollten. Zuletzt wird darauf hingewiesen, dass es keine „nudgingfreie“ Situation gibt, denn der Status quo, „nicht zu spenden“, ist auch ein Default. Summary: Nudging shows a potential to increase social engagement. The article discusses a series of large field experiments in which nudging techniques such as defaults, anchors, or reminders were implemented. The results suggest that nudging may influence donation decisions. Thus, for example, nonbinding donation recommendations change the distribution of contribution levels. More individuals choose to donate exactly the recommended amount. Some raise whereas others lower their contribution. More people donate if the recommendation is relatively low and less do so if it is relatively high. The overall effect is not clear ex ante. This and other examples show that design decisions are not simplistic and furthermore context dependent. Finally, it is demonstrated that nudging-free situations do not exist because the status quo “non-donor” is also a default.

The arbitrariness of supermajority rules

2010 ◽  
Vol 49 (1) ◽  
pp. 61-82 ◽  
Author(s):  
Melissa Schwartzberg
Keyword(s):  
Political Theory ◽  
Constitutional Amendment ◽  
Negative Consequences ◽  
Reasonable Explanation ◽  
Ex Ante ◽  
Potential Remedy ◽  
Selection Of ◽  
Do So

There may be good general grounds for the adoption of supermajoritarian thresholds, but no such general arguments can justify the selection of a specific threshold. Although the benefits of supermajority rules, especially in the context of constitutional-amendment procedures, may outweigh the costs of their ex ante indeterminacy, the technically unjustifiable nature of specific thresholds means that those who are disadvantaged under such rules can be given no rational or reasonable explanation for their defeat other than the de facto power of coordination on a threshold. Political theory has a potential remedy in cases in which good reasons are not available, and in which bad reasons (such as the desire to ensure a veto for a powerful minority) might be brought to bear: randomization. If the benefits of supermajority rules are worth the costs of arbitrariness, we may wish to randomize the choice of threshold, though the move to do so may have its own negative consequences.

scholarly journals Venture capital and risk management: evidence from initial public offerings

2012 ◽  
Vol 2 (1) ◽  
pp. 30-40 ◽  
Author(s):  
Charles E. Bamford ◽  
Edward B. Douthett
Keyword(s):  
Risk Factors ◽  
Risk Management ◽  
Venture Capital ◽  
Initial Public Offerings ◽  
Venture Capitalists ◽  
Profit Margins ◽  
Public Offerings ◽  
Operating Profit ◽  
Specific Risk ◽  
Ex Ante

In this study we analyze a sample of initial public offerings (IPOs) to infer the sources of firm-specific risk associated with investment by venture capitalists. The results indicate that IPO backing by venture capitalists is associated with risk factors related to operating profit margins and ongoing sales generation, but not operational financing. The results also indicate that venture-backed IPOs are associated with greater reductions in firm-specific risk over the course of a year that includes the date of the IPO. In sum, the findings suggest venture capitalists are willing to accept higher levels of uncertainty in those instances where they have an advantage in terms of managerial skill, and are able to reduce firm-specific risk subsequent to investment in order to maximize returns when they cash out. Our study also makes use of proxies that are representative of the ex-ante nature of firm-specific risk at the time of a new issue.

Let’s Talk: What FinReg Can Learn from New Governance (and Vice Versa)

2019 ◽  
Vol 44 (04) ◽  
pp. 1241-1250
Author(s):  
Kimberly D. Krawiec
Keyword(s):  
Civil Rights ◽  
Outcome Measures ◽  
Financial Institutions ◽  
Financial Regulation ◽  
New Governance ◽  
Ex Post ◽  
Ex Ante ◽  
The Law ◽  
Endogenous Process ◽  
Do So

Lauren Edelman’s Working Law: Courts, Corporation, and Symbolic Civil Rights (2016) is remarkably relevant to the study of financial regulation. In particular, three factors that Edelman identifies as contributing to legal endogeneity and symbolic compliance—ambiguous law, a lack of clear outcome measures, and the presence of legal intermediaries—are especially salient in this context. It has long been recognized that powerful financial institutions and the lawyers, lobbyists, and other agents who serve them have the ability to influence the law ex ante, through political lobbying. Edelman’s work reinforces the point that they may also do so ex post through an endogenous process of interpretation, implementation, and, ultimately, enshrinement of symbolic compliance with ambiguous law.

Information Asymmetry and the Ex Ante Impact of Public Disclosure Quality on Price Efficiency and the Cost of Capital: Evidence from a Laboratory Market

2014 ◽  
Vol 89 (4) ◽  
pp. 1269-1297 ◽  
Author(s):  
Orie E. Barron ◽  
Hong Qu
Keyword(s):  
Information Asymmetry ◽  
Adverse Selection ◽  
Information Quality ◽  
Cost Of Capital ◽  
Public Information ◽  
Public Disclosure ◽  
High Quality ◽  
Price Efficiency ◽  
Private Signals ◽  
Ex Ante

ABSTRACT: This paper examines the ex ante effects of public information quality on market prices and how such effects vary with information asymmetry among traders in a two-period experimental market. We vary public information quality by changing its precision and information asymmetry among traders by varying the distribution of private signals. We find high-quality public disclosure leads to increased price efficiency and decreased cost of capital in the pre-announcement period when information asymmetry is high. The impending high-quality public information increases the competition among informed traders, which leads prices to impound more private information and alleviates the adverse selection problems facing uninformed traders. Our study suggests building a high-quality public information environment (e.g., by adopting high-quality accounting standards or committing to transparent disclosure policies) would likely provide ex ante benefits for firms with significant adverse selection among traders.

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