Be Careful What You Ask For: Fundraising Strategies in Equity Crowdfunding

The so-called “FinTech revolution” is beginning to have a significant impact on the way new companies are financed. In the UK alone, it is estimated that at least 40% of early stage financing is now received via Equity Crowdfunding platforms, where the public (i.e., unaccredited investors, aka the crowd) invest…

Continue reading ⟶

Access to Collateral and the Democratization of Credit

France's Reform of the Napoleonic Security Code

Several countries use security laws derived from the Napoleonic Code, a regime predicated on the notion of “possessory ownership.” Under the highly-formalized, centuries-old Code, physical assets are deemed to be “unique,” “whole,” and “non-transferrable”. These legal frictions ultimately limit the types of security…

Continue reading ⟶

Geographic Concentration of Venture Capital Investors, Corporate Monitoring, and Firm Performance

The coordination of venture capital (VC) investors in their syndicate significantly influences their choice of contractual terms and portfolio firm performance. The difficulties in coordination and corporate monitoring incentivize VC investors to choose contractual mechanisms designed to protect them from the downside risks of early-stage entrepreneurial firms. Moreover, their firms…

Continue reading ⟶

Private Equity and Taxes

We study companies’ tax avoidance behavior after being acquired in a private equity transaction. We find that target companies’ effective tax rate decreases by 16.14% relative to the unconditional mean. This finding is in line with the hypothesis that private equity investors create shareholder value by extracting money from the…

Continue reading ⟶