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Photo of Shai Benjamin Bernstein

Unit: Entrepreneurial Management

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  • Stanford University

Shai Benjamin Bernstein

Visiting Associate Professor of Business Administration

Shai Bernstein is an Associate Professor of Finance at the Stanford Graduate School of Business. He is also a Faculty Fellow at the National Bureau of Economic Research (NBER) and at the Stanford Institute for Economic Policy Research (SIEPR). His research interests lie at the intersection of corporate finance, entrepreneurship and innovation. He has a PhD from Harvard University, MA from Hebrew university and a BA from Ben Gurion University.
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Shai Bernstein is an Associate Professor of Finance at the Stanford Graduate School of Business. He is also a Faculty Fellow at the National Bureau of Economic Research (NBER) and at the Stanford Institute for Economic Policy Research (SIEPR). His research interests lie at the intersection of corporate finance, entrepreneurship and innovation. He has a PhD from Harvard University, MA from Hebrew university and a BA from Ben Gurion University.
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Publications Awards & Honors

Journal Articles

  1. Article | Journal of Finance | Forthcoming

    Do Household Wealth Shocks Affect Productivity? Evidence from Innovative Workers During the Great Recession

    S. Bernstein, T. McQuade and R. Townsend

    Citation:

    Bernstein, S., T. McQuade, and R. Townsend. "Do Household Wealth Shocks Affect Productivity? Evidence from Innovative Workers During the Great Recession." Journal of Finance (forthcoming).  View Details
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  2. Article | Journal of Financial Economics | Forthcoming

    The Creation and Evolution of Entrepreneurial Public Markets

    Shai Bernstein, Abhishek Dev and Josh Lerner

    This paper explores the creation and evolution of new stock exchanges around the world geared towards entrepreneurial companies, known as second-tier exchanges. Using hand-collected novel data, we document the proliferation of these new stock exchanges that were created in a large number of countries, attracted a significant volume of global IPOs, were introduced fairly cyclically, and had lower listing requirements when compared to first-tier stock exchanges. We find that increases in demand for entrepreneurial capital—as proxied for by patenting, IPOs, and stock market valuations—led to a higher likelihood of the introduction of second-tier exchanges. We find no evidence that new second-tier exchanges diverted the existing flow of IPOs from established stock exchanges. Shareholder protection strongly predicted exchange success, even in countries with high levels of venture capital activity, patenting, and financial market development. Second-tier exchanges in countries with better shareholder protection allowed younger, less profitable, but faster-growing companies to raise more capital. These results highlight the importance of institutions in enabling the provision of entrepreneurial capital to young companies.

    Keywords: entrepreneurial finance; stock exchanges; Entrepreneurship; Finance; Initial Public Offering; Capital;

    Citation:

    Bernstein, Shai, Abhishek Dev, and Josh Lerner. "The Creation and Evolution of Entrepreneurial Public Markets." Journal of Financial Economics (forthcoming).  View Details
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  3. Article | Journal of Financial Economics

    Bankruptcy Spillovers

    Shai Bernstein, Emanuele Colonnelli, Xavier Giroud and Benjamin Iverson

    How do different bankruptcy approaches affect the local economy? Using U.S. Census microdata, we explore the spillover effects of reorganization and liquidation on geographically proximate firms. We exploit the random assignment of bankruptcy judges as a source of exogenous variation in the probability of liquidation. We find that employment declines substantially in the immediate neighborhood of the liquidated establishments, relative to reorganized establishments. The spillover effects are highly localized and concentrate in nontradable and service sectors, consistent with a reduction in local consumer traffic and a decline in knowledge spillovers between firms. The evidence highlights the externalities that bankruptcy design can impose on nonbankrupt firms.

    Keywords: agglomeration; Insolvency and Bankruptcy; Economy; Governing Rules, Regulations, and Reforms;

    Citation:

    Bernstein, Shai, Emanuele Colonnelli, Xavier Giroud, and Benjamin Iverson. "Bankruptcy Spillovers." Special Issue on Labor and Finance. Journal of Financial Economics 133, no. 3 (September 2019): 608–633.  View Details
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  4. Article | Review of Financial Studies

    Private Equity and Financial Fragility during the Crisis

    Shai Bernstein, Josh Lerner and Filippo Mezzanotti

    Do 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.

    Keywords: Private Equity; Financial Crisis; Performance; Financial Condition;

    Citation:

    Bernstein, Shai, Josh Lerner, and Filippo Mezzanotti. "Private Equity and Financial Fragility during the Crisis." Review of Financial Studies 32, no. 4 (April 2019): 1309–1373. (Earlier version distributed as National Bureau of Economic Research Working Paper No. 23626 and Harvard Business School Working Paper No. 18-005.)  View Details
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  5. Article | Journal of Finance

    Asset Allocation in Bankruptcy

    S. Bernstein, E. Colonnelli and B. Iverson

    Citation:

    Bernstein, S., E. Colonnelli, and B. Iverson. "Asset Allocation in Bankruptcy." Journal of Finance 74, no. 1 (February 2019): 5–53. (Lead Article.)  View Details
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  6. Article | Journal of Finance

    Attracting Early Stage Investors: Evidence from a Randomized Field Experiment

    S. Bernstein, A. Korteweg and K. Laws

    Citation:

    Bernstein, S., A. Korteweg, and K. Laws. "Attracting Early Stage Investors: Evidence from a Randomized Field Experiment." Journal of Finance 72, no. 2 (April 2017): 509–538. (Lead Article.)  View Details
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  7. Article | Review of Financial Studies

    The Operational Consequences of Private Equity Buyouts: Evidence from the Restaurant Industry

    Shai Bernstein and Albert Sheen

    Citation:

    Bernstein, Shai, and Albert Sheen. "The Operational Consequences of Private Equity Buyouts: Evidence from the Restaurant Industry." Review of Financial Studies 29, no. 9 (September 2016): 2387–2418.  View Details
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  8. Article | Journal of Finance

    The Impact of Venture Capital Monitoring

    S. Bernstein, X. Giroud and R. Townsend

    Citation:

    Bernstein, S., X. Giroud, and R. Townsend. "The Impact of Venture Capital Monitoring." Journal of Finance 71, no. 4 (August 2016): 1591–1622.  View Details
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  9. Article | Management Science

    Private Equity and Industry Performance

    Shai Bernstein, Josh Lerner, Morten Sorensen and Per Stromberg

    The growth of the private equity industry has spurred concerns about its potential impact on the economy more generally. This analysis looks across nations and industries to assess the impact of private equity on industry performance. Industries where PE funds have invested in the past five years have grown more quickly in terms of productivity and employment. There are few significant differences between industries with limited and high private equity activity. It is hard to find support for claims that economic activity in industries with private equity backing is more exposed to aggregate shocks. The results using lagged private equity investments suggest that the results are not driven by reverse causality. These patterns are not driven solely by common law nations such as the United Kingdom and United States, but also hold in Continental Europe.

    Keywords: Private Equity; Markets; Entrepreneurship; Performance; Economy;

    Citation:

    Bernstein, Shai, Josh Lerner, Morten Sorensen, and Per Stromberg. "Private Equity and Industry Performance." Management Science 63, no. 4 (April 2017): 1198–1213.  View Details
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  10. Article | Journal of Finance

    Does Going Public Affect Innovation?

    S. Bernstein

    Citation:

    Bernstein, S. "Does Going Public Affect Innovation?" Journal of Finance 70, no. 4 (August 2015): 1365–1403. (Brattle Prize Winner for Best Paper in the Journal of Finance.)  View Details
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  11. Article | Journal of Economic Perspectives

    The Investment Strategies of Sovereign Wealth Funds

    Shai Bernstein, Josh Lerner and Antoinette Schoar

    This paper examines the direct private equity investment strategies across sovereign wealth funds (SWFs) and their relationship to the funds' organizational structures. SWFs seem to engage in a form of trend chasing, since they are more likely to invest at home when domestic equity prices are higher and invest abroad when foreign prices are higher. Funds see the industry P/E ratios of their home investments drop in the year after the investment, while they have a positive change in the year after their investments abroad. SWFs where politicians are involved have a much greater likelihood of investing at home than those where external managers are involved. At the same time, SWFs with external managers tend to invest in lower P/E industries, which see an increase in the P/E ratios in the year after the investment. By way of contrast, funds with politicians involved invest in higher P/E industries, which have a negative valuation change in the year after the investment.

    Keywords: Sovereign Finance; Strategy; Investment Funds;

    Citation:

    Bernstein, Shai, Josh Lerner, and Antoinette Schoar. "The Investment Strategies of Sovereign Wealth Funds." Journal of Economic Perspectives 27, no. 2 (Spring 2013): 219–238.  View Details
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  12. Article | American Economic Journal: Microeconomics

    Contracting with Heterogeneous Externalities

    Shai Bernstein and Eyal Winter

    Citation:

    Bernstein, Shai, and Eyal Winter. "Contracting with Heterogeneous Externalities." American Economic Journal: Microeconomics 4, no. 2 (May 2012): 50–76.  View Details
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Working Papers

  1. Working Paper | 2018

    The Contribution of High-Skilled Immigrants to Innovation in the United States

    Shai Benjamin Bernstein, Rebecca Diamond, Timothy McQuade and Beatriz Pousada

    We characterize the contribution of immigrants to US innovation, both through their direct productivity as well as through their indirect spillover effects on their native collaborators. To do so, we link patent records to a database containing the first five digits of 160 million of Social Security Numbers (SSN). By combining this part of the SSN together with year of birth, we identify whether individuals are immigrants based on the age at which their Social Security Number is assigned. We find that over the course of their careers, immigrants are more productive than natives, as measured by number of patents, patent citations, and the economic value of these patents. Immigrant inventors are more likely to rely on foreign technologies, to collaborate with foreign inventors, and to be cited in foreign markets, thus contributing to the importation and diffusion of ideas across borders. Using an identification strategy that exploits premature inventor deaths, we find that immigrant collaborators create especially strong positive externalities on the innovation production of natives, while natives create especially large positive externalities on immigrant innovation production, suggesting that combining these different knowledge pools into inventor teams is important for innovation. A simple decomposition suggests that despite immigrants only making up 16% of inventors, they are responsible for 30% of aggregate US innovation since 1976, with their indirect spillover effects accounting for more than twice their direct productivity contribution.

    Keywords: innovation; economic growth; Immigrants; Innovation Strategy; Collaborative Innovation and Invention;

    Citation:

    Bernstein, Shai Benjamin, Rebecca Diamond, Timothy McQuade, and Beatriz Pousada. "The Contribution of High-Skilled Immigrants to Innovation in the United States." Working Paper, November 2018.  View Details
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  2. Working Paper | 2019

    Who Creates New Firms When Local Opportunities Arise?

    Shai Benjamin Bernstein, Emanuele Colonnelli and Timothy McQuade

    We examine the characteristics of the individuals who become entrepreneurs when local opportunities arise. We identify local demand shocks by linking fluctuations in global commodity prices to municipality level agricultural endowments in Brazil. We find that the firm creation response is almost entirely driven by young and skilled individuals. Their response is larger in municipalities with better access to finance and more skilled human capital, and is driven entirely by the formal market. These results highlight how the composition of the local population can have a significant impact on the entrepreneurial responsiveness of the economy.

    Keywords: entrepreneur; Entrepreneurship; Finance; Opportunities;

    Citation:

    Bernstein, Shai Benjamin, Emanuele Colonnelli, and Timothy McQuade. "Who Creates New Firms When Local Opportunities Arise?" Working Paper, February 2019.  View Details
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Cases and Teaching Materials

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