Subsequent Fund Research Articles

Divergent trajectories on frontier innovations: A comparison of international venture capital-invested ventures between China and the United States

How do international venture capital (IVC)-invested ventures (IIVs) between the U.S. and China generate new knowledge differently and follow distinct growth trajectories? Given that venture capital (VC) is critical for financing frontier innovations among new ventures, comparing U.S. and Chinese IIVs is essential for informing national innovation policy. Based on the organizational ecology perspective, we propose that U.S. and Chinese new ventures have divergent trajectories in frontier innovations. We identify 1782 first-round IVC investments in U.S. and Chinese new ventures operating in the computer software, e-commerce, biotechnology, semiconductors, and artificial intelligence sectors between 2010 and 2020 along with their 2825 patents (317 Chinese patents and 2508 U.S. patents). Our findings indicate that Chinese IIVs exhibit greater variation in terms of technological distance, search scope, and knowledge coupling, compared to U.S. IIVs. However, Chinese IIVs’ frontier innovations have more divergent technological trajectories and attract fewer followers than U.S. IIVs, based on patent citations. In a firm-level analysis, we find that Chinese IIVs are less likely to receive a subsequent financing round. Further, IIVs with greater technological distance and search scope, and with higher impact patents, have more opportunities to receive the next round of funding.

Bailout Stigma

ABSTRACTWe develop a model of bailout stigma in which accepting a bailout signals a firm's balance‐sheet weakness and reduces its funding prospects. To avoid stigma, high‐quality firms withdraw from subsequent financing after receiving bailouts or refuse bailouts altogether to send a favorable signal. The former leads to a short‐lived stimulation followed by a market freeze even worse than if there were no bailout. The latter revives the funding market, albeit with delay, to the level achievable without any stigma and implements a constrained optimal outcome. A menu of multiple bailout programs compounds bailout stigma and exacerbates the market freeze.

The cumulative prospect theory and fund flows in emerging markets

ABSTRACT This study is the first to examine the efficacy of the Cumulative Prospect Theory value of the past return (CPTV) to explain fund flow in emerging markets funds by considering the impact of fund managers’ characteristics and behavioural biases on fund investors’ investment decisions. Besides, this study also investigates the impact of fund investors’ ability to identify fund managers’ skills. The findings suggest that CPTV has a significant and positive association with subsequent fund flow and emerging market funds’ performance. Notably, the study documents a negative relationship between fund flow and fund size and also highlights that newer funds generate greater fund flows. Furthermore, the findings indicate that investors investing in emerging market funds tend to behave differently, allocate money for alpha, and avoid giving distorted income for factor-related returns to fund managers. The results demonstrate that managers’ skill and portfolio concentration decision affects fund flow and CPTV relationships. The findings illustrate that fund managers who concentrate their portfolio and invest in high CPTV stocks tend to generate higher fund flow than their diversified counterparts.

Abandonment and Site Restoration (ASR) Funding Scheme in the Context of Environmental Protection after Upstream Oil and Gas Business Activities from an Economic Law Perspective

This study focuses on the Abandonment and Site Restoration (ASR) Funding Scheme and its significance in environmental protection following upstream oil and gas activities. ASR activities have a substantial impact on the environment, necessitating an adequate funding scheme to ensure both environmental preservation and economic sustainability in the oil and gas sector. The presence of comprehensive regulations governing the implementation of ASR activities is crucial, as they address not only the restoration of environmental functions but also accountability and financing. Failure to address these concerns could lead to future problems, particularly when operations are completed and oil and gas companies have departed from Indonesia. This research, conducted through legal analysis, examines the implementation of ASR activities in accordance with international and Indonesian laws and regulations, while also identifying the obstacles encountered in their execution. The study employs normative legal research methodology, utilizing secondary data such as laws, regulations, and books. The findings of this research elucidate the funding scheme for post-operation ASR activities, including the ASR funds outlined in SKK Migas Decree No. KEP-OO87/SKKMAO0O0/2018/SO, which provides guidelines for Abandonment and Site Restoration Work, and the subsequent fund arrangements following upstream oil and gas operations as stipulated in Permen ESDM No. 15 of 2018.

Global supply chains and cross‐border financing

This paper provides evidence that the formation of global supply chain partnerships leads to an increased usage of cross‐border financing. The findings are detected in all three major financing markets—equities, syndicated loans, and public debt. Difference‐in‐differences tests allow us to draw a causal interpretation of our main findings, which also holds in several robustness tests. Our findings suggest that increased cross‐border financing reflects greater ability to access global financial markets, due to enhanced firm visibility and investor attention, as well as operational forces that arise when establishing new global supply chain partnerships. Specifically, we provide evidence that firms that are small, held less by institutional investors, and followed by fewer analysts have more benefits in cross‐border financing from the formation of the global supply chain. Our findings have important implications for firms attempting to integrate into the global supply chain network. More broadly, our findings suggest that the information generated by operational activities can have significant effects on subsequent financing activities.

Heterogeneous Networks and Startups’ Subsequent Financing: Theorization Based on Machine Learning

Heterogeneous Networks and Startups’ Subsequent Financing: Theorization Based on Machine Learning

Crowd-based feedback and early-stage entrepreneurial performance: Evidence from a digital platform

The ability to identify early-stage venture potential, which has traditionally relied on experts, is challenging because new ideas are uncertain. However, judgment from a large number of evaluators can effectively identify promising ventures. This paper empirically studies whether crowd-based information generates informative feedback for entrepreneurs and seed investors. Using data on 701 early-stage founders of new ventures examined by 2600 evaluators, I estimated the effects of crowd-based ratings on survival and securing seed funds. I find that the crowd rating was uncorrelated with subsequent financing events from seed investors but increased a venture's probability of continuation by 3.1 percentage points. This effect became stronger as the number of evaluators increased. This finding highlights that a judgment aggregation offers information for nascent venture founders.

Does performance-chasing behavior matter? International evidence

We use funds of hedge funds data from more than 40 countries to analyze how investors’ performance-chasing behaviors affect subsequent fund performance. Fund performance improves when investors are sensitive to past performance. Higher flow-performance sensitivity (FPS) leads to better subsequent performance. A one-standard-deviation increase in FPS is associated with an increase of around 1% per annum in subsequent performance. The positive effect is stronger when fund flows are less affected by market uncertainty, when funds are less prone to decreasing returns to scale, and when funds have shorter share restriction periods. This positive effect varies across regions, and it is most significant in low individualistic countries, suggesting that investors in low individualistic countries can influence fund performance through their response to past performance.

Энтропия системного управления безопасностью дорожного движения: методика и практика использования

The safety issues of road transport operation have been relevant for more than 125 years. During this time, the vision of the essence and ideas about the principles and methods of ensuring road safety (traffic safety paradigms) have changed several times in the world scientific community. The purpose of this article is to present to the scientific community a new, developing entropy approach to assessing the quality of traffic safety system management. The need to use entropy approaches is dictated by the awareness of two main circumstances: the extreme variety of forms, composition and, ultimately, the complexity of transport systems, as well as the low effectiveness of using traditional modeling methods in assessing the quality of large and complex systems, which include traffic safety systems. The use of the entropy approach in the field of traffic safety management is very innovative for Russia. Already quite traditional for other spheres of human existence, the methods of entropy assessment of systemic organization are unfamiliar to transport specialists. In this regard, it should be noted that the entropy approach allows solving those tasks in the field of traffic safety that are inaccessible to conventional tools. An example of such tasks can be a quantitative assessment and comparison of the quality of management of regional traffic safety systems. This is especially important for improving the quality of federal traffic safety management, in particular, for improving goal-setting and subsequent financing of the relevant regional traffic safety programs. This is the practical significance of the author’s ideas. This article presents a method for quantifying the Relative entropy Hn of regional traffic safety systems; comparison and explanation of different levels of organization of traffic safety systems in the Orenburg region and the Republic of Tyva; an entropy classification of regional traffic safety systems in Russia by levels of system organization is presented (2021); an attempt was made to philosophically comprehend the results obtained. The results presented in the article are intermediate. The ideology of using the entropy assessment of system organization can be used not only in relation to such an important aspect of the functioning of transport systems as traffic safety, but also to the identification of other system properties, such as efficiency and quality. Key words: road safety, management, quality, system (process) entropy, entropy approach.

The Impact of Financing Constraints and Uncertainty on Manufacturing Innovation Efficiency: An Empirical Analysis from Chinese Listed Firms

Chinese listed manufacturing companies face more serious financing constraints. Considering financing constraints and uncertainties, an accurate assessment of the innovation efficiency of China’s listed manufacturing industry can provide decision support for China to become an innovation nation. We construct a heterogeneous stochastic frontier model to analyze the overall innovation efficiency, innovation quality efficiency, and innovation quantity efficiency of the Chinese manufacturing industry, using Chinese A-share listed manufacturing companies as a research sample from 2011–2019. The research results show that (1) Financing constraints make enterprises deviate from innovation efficiency, and internal financing significantly reduces enterprise financing constraints and does not bring uncertainty to subsequent financing, commercial credit, and external financing; although it can alleviate enterprise financing constraints, it will increase the uncertainty of subsequent financing constraints and the enterprise size.. (2) Internal financing, commercial credit financing, external financing, and firm size can effectively alleviate the financing constraint for firms to carry out quality innovation activities of invention patents and quantitative innovation activities of utility patents; internal financing, external financing, and firm size can effectively alleviate the financing constraint for quantitative innovation activities of design patents, while commercial credit financing has no significant effect. (3) The influence of factors such as financing constraints makes the real innovation efficiency of China’s listed manufacturing industry only about 20%, and enterprises face more serious financing constraints. (4) The heterogeneity results found that the overall innovation efficiency, innovation quality efficiency, and innovation quantity efficiency in the eastern region are the highest, and the innovation efficiency level is higher than the national average, followed by the central and western regions. The overall innovation efficiency, innovation quality efficiency, and innovation quantity efficiency of the central region are higher than the national average, but the innovation quality efficiency and innovation quantity efficiency of the western region are lower than the national average; the overall innovation efficiency, innovation quality efficiency, and innovation quantity efficiency of large-scale enterprises are the highest and even higher than the average value of the whole sample, while the innovation efficiency of medium and small-scale enterprises are lower than the average value of the whole sample.

Crowd-Based Feedback and Early-Stage Entrepreneurship Performance: Evidence from a Digital Platform

The ability to identify early-stage venture potential, which has traditionally relied on experts, is challenging due to the uncertainty of new ideas. However, an alternative judgment from a large number of evaluators can effectively identify promising ventures. This paper empirically studies whether crowd-based information generates informative feedback for entrepreneurs as well as seed investors. Using data on about 701 early-stage founders of new ventures examined by 2,600 evaluators, I estimate the effects of crowd-based ratings on survival and securing seed funds. I find that the rating from the crowd is uncorrelated with subsequent financing events from seed investors but increases a venture’s probability of continuation by 3.1 percentage points. This effect becomes stronger as the number of evaluators increases. This highlights that the aggregation of judgments offers information for nascent founders of ventures.

The Effect of Learning Modality on Subsequent Courses in the Finance Major: Does Online Learning Impact Student Success?

This paper investigated the impact of learning modality of the fundamental finance course on student success in subsequent finance courses. We studied students’ characteristics, learning modality, and learning outcomes in a sequence of finance courses at the Texas Woman’s University from 2013 to 2020. We found students who took the fundamental finance course (FIN1) online performed better in the second finance course (FIN2). This effect was robust after we controlled for year fixed effects and factors considered to influence student performance. To treat the selection issue of choosing to take FIN1 online, we utilized 2SLS and main results still hold.

Pay for performance, partnership success, and the internal organization of venture capital firms

We show how the structure of partner incentives and decision processes within a venture capital firm contribute to fund performance and partnership success. Optimal capital allocation during staged financing requires that partner incentives encourage cooperation by linking a partner's compensation to the return on the entire fund rather than return on the investment sponsored by an individual partner. Incentives for individual performance are optimally provisioned by a higher profit share in a subsequent fund. Our paper provides an economic underpinning to empirical observations about partner pay and the internal organization of venture capital firms.

Fund trading divergence and performance contribution

Considering that the most distinct trading decisions are crucial to evaluate the ability of fund managers to add value, this paper aims to examine the trading divergence level among mutual funds and to capture its determinants and its performance consequences. We propose a measure that is more informative than the traditional overlap metrics, providing evidence of a positive and significant trend of fund trading divergence over time, especially after the Global Financial Crisis (GFC) of 2008. Our results also show a negative influence of market stress on the trading divergence level. Interestingly, we find greater contribution to subsequent fund performance in the divergent portions of trading decisions.

The Probability of the Financing Sustainability of Micro-firms Supported by Islamic Social Fund

This study aims to identify factors that influence financing sustainability, thereby determining the probability of attaining the subsequent financing from Islamic social funds. Islamic social funds provide funding for micro-firms using a financing scheme that differs from conventional financing terms. For the lower level, Islamic social funds usually offer a limited amount of no-cost financing called qard. In contrast, for more profitable micro-firms, Islamic social funds provide low-cost financing called murabahah. However, most micro-firms need financing in sustainable terms, either using a qard scheme or a murabahah scheme. We assume that only micro-firms showing business growth may generate higher financing using the murabahah scheme. We use data from 1,346 micro-firms. We found several factors that contribute significantly to a micro-firm having a higher chance of generating further funding, such as group-type financing, amount of funding (plafond), time to maturity, and demographic aspects such as age and number of dependents. However, we found that the initial contract scheme (whether qard or murabahah) does not relate to the chance of eligibility for further financing.How to Cite:Hakim, A. & Dalimunthe, Z. (2022). The Probability of Financing Sustainability of Micro firms Financially Supported by Islamic Social Fund. Etikonomi, 21(1), 127-138. https://doi.org/10.15408/etk.v21i1.12316.

Institutional Investors and Corporate Governance: The Incentive to Be Engaged

ABSTRACTThis paper studies institutional investors’ incentives to be engaged shareholders. In 2017, the average institution gains an extra $129,000 in annual management fees if a stockholding increases 1% in value, considering both the direct effect on assets under management and the indirect effect on subsequent fund flows. The estimates range from $19,600 for investments in small firms to $307,600 for investments in large firms. Institutional shareholders in one firm often gain when the firm's competitors do well, by virtue of institutions’ holdings in those firms, but the impact of common ownership is modest in the most concentrated industries.

How Does Deleveraging Affect Funding Market Liquidity?

How does deleveraging affect the market liquidity of high-embedded-leverage securities issued by financial institutions and the funding constraints of these institutions? We use the forced deleveraging of structured mutual funds during the 2015 Chinese stock market crash to study the effects of deleveraging. Our regression-discontinuity analysis shows that deleveraging significantly reduces the market liquidity of the deleveraging funds’ equity units. Moreover, our difference-in-differences analysis shows that deleveraging results in large decreases in subsequent fund flows, stock and cash holdings, and performance, with the impact channeled through the deterioration of the market liquidity of the fund’s equity units. This paper was accepted by Victoria Ivashina, finance.

Государственно-церковные отношения и религиозная ситуация в провинциальном городе в 1997–2003 гг. (на примере города Тольятти)

Introduction. The goal of the article is to investigate the nature and assess the results of statechurch relations in Tolyatti after the implementation of the Federal Law “On Freedom of Conscience and Religious Associations” of September 26, 1997. Materials and Methods. In order to implement the goal of the research, we used the materials of the municipal public institution “Tolyatti Archive” (orders and resolutions of the mayor of Tolyatti), data from periodicals, memoirs of contemporaries, materials of the current archive of the Samara diocesan administration closed to the public (reports of the ruling Bishop of the Samara diocese to the Moscow Patriarchate), materials from the author’s personal archive: reports of the assistant governors of Samara Oblast on religious issues reports of both secular and ecclesiastical officials on the religious situation in Samara Oblast and Tolyatti, other official and unofficial documents, many of which, due to their specificity, do not end up in Church or secular archives (correspondence between the heads of local religious organizations with Tolyatti Duma and City Hall officials; protocols of City Hall meetings on religious issues and the protocols of meetings in the religious organizations, which were conducted by the author). The research methodology includes the method of document analysis. Analysis. The construction of churches, the development of educational institutions, the opening of a monastery, guardianship and fraternities, and the publication of religious periodicals continued in 1997–2003. For Tolyatti’s clergy and believers, the preparation and celebration of the 2000th anniversary of the Nativity of Christ was an opportunity to express themselves in the media, increase the number of parishes and ask the authorities for assistance in solving various life issues including financial assistance. The Orthodox clergy also hoped to solve the problem of various religious organizations and sects functioning on the territory of Tolyatti, which they considered their canonical territory, with the help of the authorities. Results. With the celebration of the 2000th anniversary of Christianity, Orthodox religious organizations strengthened their position in society, established a dialogue with business and government, and gained advantages over other religious organizations in all matters. It was connected with both the allocation of land for temples and their subsequent financing.

Multilateral development banks: understanding their impact on start-up development in Latin America

Purpose This paper aims to examine the relative performance of multilateral development banks venture capital funds (MDBVCs) compared to that of government-sponsored venture capital funds (GVCs), assessing their impact on invested start-ups. Design/methodology/approach First, the authors survey the literature to understand the performance drivers of public programs designed to foster venture capital (VC). Second, the authors analyze the characteristics of multilateral development banks (MDBs) VC-related efforts. Third, based on their goals, structure, governance and management processes, the authors propose and test the hypothesis that MDBs initiatives outperform comparable public programs, overcoming the main limitations of the latter. Findings The authors find that start-ups funded by MDBVCs outperform GVC-funded start-ups in terms of access to subsequent financing and international expansion. Consistent with previous studies, the authors find that start-ups funded by private VCs show the highest levels of performance. Originality/value The paper features an unstudied actor – i.e. MDBVCs-, and an unstudied region – i.e., Latin America-, using a unique data set of 437 start-ups that received VC investments in 7 Latin American countries during the study period 2000–2018.

Exacerbation of working conditions due to the economic pressures of hospitals : Mandatory staffing ratios for physicians?

HintergrundIn der aktuellen stationären urologischen Versorgung sind ökonomischer Druck sowie dessen Einfluss auf die urologische Arbeits- und Weiterbildungsbedingungen ein Hauptkritikpunkt junger Urolog*innen. Vor dem Hintergrund eines wachsenden Nachwuchsbedarfs in unserer Fachdisziplin zeichnet sich somit ein dringender Handlungsbedarf ab. Mit der Einführung der Pflegepersonaluntergrenzen droht nun der Abbau von ärztlichem Personal mit dem Ziel einer betriebswirtschaftlich bedingten Kostenreduktion.Ziel der ArbeitEin verpflichtender Personalschlüssel wird häufig genannt um dem Personalabbau in deutschen Klinken entgegenzuwirken. Welche Rolle die Personaluntergrenze hierbei spielt wird im folgenden Artikel erläutert.Material und MethodenWir analysierten die aktuellen Gesetzesentwürfe der Bundesregierung, sowie Positionspapiere und Stellungnahmen bundespolitischer Vertreter wie dem Marburger Bund, Bundesverband Deutscher Urologen und der Bundesärztekammer seit dem Jahr 2018.Ergebnis und DiskussionDie Analyse der aktuellen Entwicklungen in der Pflegepolitik zeigt auf, dass als erster Schritt eine bedarfsorientierte Personalbemessung und anschließende Finanzierung im stationären Rahmen unerlässlich ist. Mit der adäquaten Personalbemessung wie im Ampelschema Bundesärztekammer würden sich nicht nur Kliniken als attraktive Arbeitgeber und Weiterbildungsstätten für große Teile der urologischen Ärzteschaft positionieren, sondern auch maßgeblich eine Verbesserung von Arbeitsbedingungen, Patientenversorgung und Patientensicherheit erwirken. Ärztliche Weiterbildung muss weiterhin essenzieller Teil des Klinikalltags bleiben.