Finance

- May–June 2021
- Article
Case Study: What Role Should a Company Play in a National Crisis?

By: Christopher J. Malloy

The article presents a fictionalized case study asking what type of role should a company play in national crisis, specifically a tsunami hitting Indonesia, similar to the 2004 Indian Ocean tsunami. Topics include how disasters can impact family-owned companies, the need for appointing rapid-response teams before disasters happen, and evaluating the use of disaster relief funds.
- May–June 2021
- Article
Case Study: What Role Should a Company Play in a National Crisis?

By: Christopher J. Malloy

The article presents a fictionalized case study asking what type of role should a company play in national crisis, specifically a tsunami hitting Indonesia, similar to the 2004 Indian Ocean tsunami. Topics include how disasters can impact family-owned companies, the need for appointing rapid-response teams before disasters happen, and evaluating...
- April 2021
- Case
The Incentive for Legacy: Tsinghua University Education Foundation

By: Lauren Cohen, Hao Gao and Spencer C.N. Hagist

Vivian Yuan seeks to bolster the Tsinghua University Education Foundation's fundraising efforts and investment goals in a new era of Chinese higher education. Competing with elite members of China's C9 League of top universities, she must develop a set of incentives and deliverables for alumni and non-affiliated donors which can bridge the gaps in their own investment and philanthropic prospects. To do so, she must specify what makes the university unique as a donation opportunity, and highlight the things TUEF can accomplish that no one else can.
- April 2021
- Case
The Incentive for Legacy: Tsinghua University Education Foundation

By: Lauren Cohen, Hao Gao and Spencer C.N. Hagist

Vivian Yuan seeks to bolster the Tsinghua University Education Foundation's fundraising efforts and investment goals in a new era of Chinese higher education. Competing with elite members of China's C9 League of top universities, she must develop a set of incentives and deliverables for alumni and non-affiliated donors which can bridge the gaps in...
- 2021
- Working Paper
Venture Capital’s 'Me Too' Moment

By: Sophie Calder-Wang, Paul A. Gompers and Patrick Sweeney

In this paper, we document the historically low rate of hiring of women in the venture capital sector. We find that the high-profile Ellen Pao v. Kleiner Perkins gender discrimination trial had dramatic treatment effects. In difference-in-differences regressions, we find that the rate of hiring of female venture capitalists increased substantially after the trial and that the hiring was more pronounced in states that were more receptive to the exposure. We use the state-level mandated maternity benefits as an instrument for the receptivity to the treatment effects of the Pao Trial. We also show that the fraction of founders who are female increases after the Pao Trial, but that the increase is driven entirely by the hiring of female venture capitalists. There is no increase in the propensity of male venture capitalists to invest in female founders in the post-Pao Trial period.
- 2021
- Working Paper
Venture Capital’s 'Me Too' Moment

By: Sophie Calder-Wang, Paul A. Gompers and Patrick Sweeney

In this paper, we document the historically low rate of hiring of women in the venture capital sector. We find that the high-profile Ellen Pao v. Kleiner Perkins gender discrimination trial had dramatic treatment effects. In difference-in-differences regressions, we find that the rate of hiring of female venture capitalists increased substantially...

About the Unit

Our strategy is to assemble and nurture a faculty whose interests and skills complement each other, and who work well together:

a) to produce a broad range of finance-related research that is published in top-tier scientific and practitioner journals, and that addresses issues of present and future importance to managers (including regulators and policy makers);

b) to develop highly-relevant and intellectually rigorous MBA and executive education courses; and

c) to mentor future academics through the Business Economics doctoral program.

Our applied focus and access to business organizations are major advantages which are reinforced by our students and our case-based approach. We have a faculty with broad expertise, and we have resources, field contacts, and institutional support, all of which we can leverage to do richer work and be more productive than we could at other institutions.

Recent Publications

Case Study: What Role Should a Company Play in a National Crisis?

By: Christopher J. Malloy

May–June 2021 |
Article |
Harvard Business Review

The article presents a fictionalized case study asking what type of role should a company play in national crisis, specifically a tsunami hitting Indonesia, similar to the 2004 Indian Ocean tsunami. Topics include how disasters can impact family-owned companies, the need for appointing rapid-response teams before disasters happen, and evaluating the use of disaster relief funds.

Citation

Find at Harvard

Exercise for Revlon: Surviving Covid-19

By: Kristin Mugford and Sarah Gulick

April 2021 |
Supplement |
Faculty Research

Exercise for Revlon: Surviving Covid-19

Keywords: Leveraged Buyouts; Insolvency and Bankruptcy; Financial Liquidity; Bonds; Corporate Finance; Borrowing and Debt; Beauty and Cosmetics Industry; Financial Services Industry; United States

Citation

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The Incentive for Legacy: Tsinghua University Education Foundation

By: Lauren Cohen, Hao Gao and Spencer C.N. Hagist

April 2021 |
Case |
Faculty Research

Vivian Yuan seeks to bolster the Tsinghua University Education Foundation's fundraising efforts and investment goals in a new era of Chinese higher education. Competing with elite members of China's C9 League of top universities, she must develop a set of incentives and deliverables for alumni and non-affiliated donors which can bridge the gaps in their own investment and philanthropic prospects. To do so, she must specify what makes the university unique as a donation opportunity, and highlight the things TUEF can accomplish that no one else can.

Keywords: Finance; Marketing; Strategy; Negotiation; Organizations; Markets; China

Citation

Educators

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Diversity and Performance in Entrepreneurial Teams

By: Sophie Calder-Wang, Paul A. Gompers and Kevin Huang

2021 |
Working Paper |
Faculty Research

We study the role of diversity and performance in the entrepreneurial teams. We exploit a unique dataset of MBA students who participated in a required course to propose and start a real micro-business that allows us to examine horizontal diversity (i.e., within the team) as well as vertical diversity (i.e., team to faculty advisor) and their effect on performance. The design of the course allows for identification of the causal implications of horizontal and vertical diversity. The course was run in multiple cohorts in otherwise identical formats except for the team formation mechanism used. In several cohorts, students were allowed to choose their teams from among students in their section (roughly 90 students). In other cohorts, students were randomly assigned to teams based upon a computer algorithm. In the cohorts that were allowed to choose, we find strong selection based upon shared attributes. Among the randomly-assigned teams, greater diversity along the intersection of gender and race/ethnicity significantly reduced performance. However, the negative effect of this diversity is alleviated in cohorts in which teams are endogenously formed. Finally, we find that teams with more female members perform substantially better when their faculty section leader was also female. Because the gender of the faculty section leader is exogenous to the gender make-up of the entrepreneurial team, the positive performance effects can be interpreted as causal. These findings suggest that diversity policies should take adequate consideration of the multiple dimensions of diversity.

Citation

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Venture Capital’s 'Me Too' Moment

By: Sophie Calder-Wang, Paul A. Gompers and Patrick Sweeney

2021 |
Working Paper |
Faculty Research

In this paper, we document the historically low rate of hiring of women in the venture capital sector. We find that the high-profile Ellen Pao v. Kleiner Perkins gender discrimination trial had dramatic treatment effects. In difference-in-differences regressions, we find that the rate of hiring of female venture capitalists increased substantially after the trial and that the hiring was more pronounced in states that were more receptive to the exposure. We use the state-level mandated maternity benefits as an instrument for the receptivity to the treatment effects of the Pao Trial. We also show that the fraction of founders who are female increases after the Pao Trial, but that the increase is driven entirely by the hiring of female venture capitalists. There is no increase in the propensity of male venture capitalists to invest in female founders in the post-Pao Trial period.

Citation

Read Now

Litigation Finance 2.0: LexShares

By: Lauren Cohen, Spencer C. N. Hagist and Yago Zavalia Gahan

March 2021 |
Case |
Faculty Research

Litigation finance - also referred to as third party litigation funding - was in its relative infancy as an asset class when Jay Greenberg and Max Volsky made a platform-play in the space. 7 years later, the market was far from "mainstream," but nonetheless had grown significantly, as had the litigation financing platform they founded, LexShares. They faced a cross-roads on what came next for LexShares - whether 1.) to continue on with a focus to grow its platform marketplace for legal cases that outside investors could invest in; or 2.) put a relatively larger focus on building their own asset management arm that sourced, chose, and invested in hand-picked cases for outside investors in a fund capacity. Greenberg knew that (2) might seriously encroach on (1), and was frought with mis-steps shown through past unsuccessful platform transitions - but the potential upside provided by (2) had the potential to be nothing short of company-changing.

Keywords: Finance; Entrepreneurship; United States

Citation

Educators

Astralis Group: Determining a Brand Strategy

By: Benjamin C. Esty, Mette Fuglsang Hjortshoej and Emilie Billaud

March 2021 |
Case |
Faculty Research

After launching a Danish esports company in July 2019, and going public in December 2019 with multiple brands associated with different games, the Astralis leadership team was contemplating a shift to a single, corporate brand. While the original arguments for multiple, team-based brands were that esports fans differed by game and the holding company structure made it easier to acquire and divest teams, Jakob Lund Christensen, the firm’s chief commercial officer (CCO), now believed that a single, corporate brand strategy made more sense as the popularity of esports continued to grow—the COVID-19 pandemic in 2020 was causing interest and participation in esports to grow rapidly. Rather than a holding company, Christensen saw the possibility of creating a leading esports company under the Astralis brand. In addition to being easier to manage corporate resources, he argued it would be easier and more lucrative to monetize a single brand. He was scheduled to meet with the firm’s other leaders—CEO Anders Hørsholt and Chairman Nikolaj Nyholm, in just over a week to discuss whether they should indeed change the firm’s branding strategy.

Citation

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Making Impact Investing Markets: IFC (B)

By: Shawn A. Cole, John Masko and T. Robert Zochowski

March 2021 |
Supplement |
Faculty Research

In 2018, Thailand’s Bank of Ayudhya (known as Krungsri), was considering whether to participate in the first issue of a new financial instrument from the International Finance Corporation (IFC), known as a gender bond. Building on the success of the Green Bond program at promoting investment in sustainable businesses, IFC intended the Gender Bond to encourage local banks to lend to woman-owned businesses. IFC was offering Krungsri substantial investment support with the bond, but getting the new instrument past Thai regulators and making sure that the proceeds were used properly presented substantial risk for the bank. Should Krungsri pull the trigger on its first Gender Bond?