Paul A. Gompers

Eugene Holman Professor of Business Administration

Paul Gompers, Professor of Business Administration at the Harvard Business School, specializes in research on financial issues related to start-up, high growth, and newly public companies. Professor Gompers has an appointment in both the Finance and Entrepreneurial Management areas. He received his A.B. summa cum laude in biology from Harvard College in 1987. After spending a year working as a research biochemist for Bayer Chemical AG, he attended Oxford University on a Marshall Fellowship where he received an M.Sc. in economics. He completed his Ph.D. in Business Economics at Harvard University in 1993. Professor Gompers spent two years as an Assistant Professor of Finance at the Graduate School of Business, the University of Chicago where he created a new course entitled 'Entrepreneurial Finance and Management.' His course development efforts at the Harvard Business School focuses on issues affecting entrepreneurial firms and their investors.  He also teaches in HBS Executive Education.

His research focuses on the structure, governance, and performance of private equity funds; sources of financing, incentive design, and performance of private firms; and long-run performance evaluation for newly public companies. His work on private equity funds has examined the relationship between general partners and their portfolio companies. Gompers has investigated factors affecting the structure, timing, and monitoring activities by the general partner and how these factors affect the success or failure of entrepreneurial firms. Similarly, he has examined the relationship between institutional investors and private equity fund managers. This work has examined a large collection of partnership agreements and examined issues of compensation, covenants and restrictions, as well as distribution policy and performance. Other research efforts examine the institutional and market factors that influence the performance of newly public companies. He is a Faculty Research Fellow in the National Bureau of Economic Research's Corporate Finance Program.

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  1. Venture Capital Organizations and Entrepreneurial Finance

    by Paul A. Gompers

    Paul A. Gompers is examining corporate control and governance issues in venture capital organizations and entrepreneurial firms in an effort to understand how their relationships with their investors affect the venture capitalists' investment decisions. Using theoretical models, large-sample empirical research, and field-based case studies, Gompers is examining the governance structures-covenants, restrictions, and compensation-employed in venture capital organizations. He is also examining the relationships between venture capitalists and the entrepreneurs they finance in an effort to identify the control mechanisms the former employ to influence the latter, and is attempting to identify the determinants of success and failure in venture capital-backed companies. Gompers is developing from his findings course materials on venture capital and entrepreneurial finance.
  2. Long-Run Performance Following Equity Issue

    by Paul A. Gompers

    In an effort to establish how the transition from private to public firm affects performance, Paul A. Gompers is examining the long-run performance of companies that issue equity in an initial public or seasoned offering. He is also attempting to determine whether involvement with a venture capital backer improves performance. Gompers is using recent innovations in multifactor asset-pricing models to evaluate firm performance and is developing new methods of measuring performance in varied settings. His findings to date demonstrate that underperformance is concentrated in small companies, not backed by venture capitalists, that went public in the early 1980s.
  3. Financing New Business Formation

    by Paul A. Gompers

    New business creation has become a potent force for economicdevelopment in the United States. Prior to 1980, large firms created the majority of new jobs in the American economy. While considerable debate rages over whether small firms are the source of recent job creation, it is clear from the data that new firms are an important source of technology, innovation, and jobs. No one would call Microsoft, Apple, or Genentech small companies, but all of them are very young. From 1972 through 1992, more than 4,513 companies went public by issuing equity in an initial public offering. Most of these firms were less than ten years old. New firms continue to transform the economic landscape, but we know very little about the sources of capital and investment behavior of these firms before they go public.
    A goal of the project would be research projects related to optimal sources of financing. Some of the research questions that Professor Gompers is addressing include: How do industry and firm specific characteristics interact to determine the optimal source of capital? How does firm performance affect who gives firms their financing to grow? How do the sources of financing affect the speed at which the firm can grow? Have there been secular changes in the sources of financing over the time period? Does the presence of a professional investor, such as a venture capitalist, improve the pre-public performance of a company (e.g. can it reach a critical size sooner) compared to a firm that has not received venture capital financing.