Research

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Currently, my research focus is on multiple aspects of financing innovation. This exciting research field covers a broad range of important issues, related to such topics as venture capital (VC), entrepreneurial finance, and corporate innovation.

My research within this broad agenda includes: analyzing the valuation principles of VC-backed companies and the implications for fair values of the most valuable of these companies; exploring the ways venture capitalists make investment decisions and add value to their portfolio companies; examining the determinants of VC investment returns and the success of entrepreneurial companies; and the impact of the VC industry on the U.S. economy.

My research on financing innovation has been presented to academic community, multitude of practitioners, and featured and commented on in the media. 

Some of the financing innovation topics my colleagues and I are actively studying include:  how corporate venture capitalists make decisions and best (and worst) practices in corporate VC; valuation of early-stage VC-backed companies; contracting and corporate governance of VC-backed companies; contracts between VC funds and their investors and their impact on VC fund returns; optimizing the portfolio decisions of start-up investors; and the determinants of success and failure of start-ups and start-up investors. Stay tuned for release of new research results. 

This recent work is based on my research of how firms and individuals make dynamic financing and investment decisions, and how these decisions play out in aggregate. Toni Whited and I wrote a review of dynamic corporate finance. Here are some other examples of my research in this broad area: capital structure of banks and the impact of capital regulation, optimal dynamic corporate financial policies; dynamic policies of abandoning innovative ventures; explaining various stylized facts such as the low-leverage, equity premium, and credit risk puzzles; interactions between corporate decisions and credit risk; the macroeconomic impact of financial decisions; market-based estimation of default costs; empirical modeling of dynamic capital structure. My co-authors and I also explore the long-term history of U.S. default rates, link them to macroeconomics and banking crises, as well as investigate the evolution of the global stock ownership.

Working Papers

Publications

Media on My Research

Squaring Venture Capital Valuations with Reality – NBER, NYT, WSJ, Barrons, Bloomberg,
Forbes, Fortune, G&M, Wired, BC Business, BIV, BJ, Bloomberg TV, Business Insider,
El Economista, Les Echos, MSN, Stanford, TechVibes

How do Venture Capitalists Make Decisions –  Chicago, Stanford, VentureBeat

Financing as a Supply Chain – Fortune

The Economic Impact of Venture Capital – National Review, Tech Republic

Research Community

Ph.D. Students

I have been privileged to work with and advise many talented Stanford Ph.D. students over the years. Most of them choose an academic career and continue their brilliant work as professors at business schools and universities across the nation. Here are the Ph.D. students I have been honored to work with:

2012-2017  Akitada Kasahara (Ph.D co-advisor, Stanford GSB), 1st job: Waseda University
2011-2016  Michael Schwert (Ph.D advisor, Stanford GSB), 1st job: Fisher School of Business, Ohio State University
2010-2015  Will Gornall (Ph.D advisor, Stanford GSB), 1st job: Sauder School of Business, University of British Columbia
2010-2015  Pavel Zryomov (Ph.D advisor, Stanford GSB), 1st job: The Wharton School, University of Pennsylvania
2008-2013  Will Cong (Ph.D co-advisor, Stanford GSB), 1st job: Booth School of Business, University of Chicago
2007-2010  Alexander Gorbenko (Ph.D advisor, Stanford GSB), 1st job: London Business School
2006-2011  Andrey Malenko (co-author, Stanford GSB), 1st job: MIT Sloan
2006-2009  Zhipeng Zhang (Ph.S. co-advisor, Stanford GSB), 1st job: Boston College
2005-2008  Baozhong Yang (Ph.D. co-advisor, Stanford GSB), 1st job: Georgia State University
2005-2007  Scott Joslin (Ph.D. reading committee, Stanford GSB), 1st job: MIT Sloan
2004-2006  Leandro Saita (Ph.D. reading committee, Stanford GSB), 1st job: Goldman Sachs

Co-Authors

I have been very fortunate to work with so many inspirational and knowledgeable co-authors. I list them here with my gratitude:

Viral Acharya, Stern School of Business, NYU
Harjoat S. Bhamra, Imperial College Business School
Ulrich Bindseil, European Central Bank
Zhiyao (Nicholas) Chen, CUHK Business School
Sergei Davydenko, Rotman School of Management, University of Toronto 
Michael Ewens, California Institute of Technology
Kay Giesecke, Stanford University
Paul Gompers, Harvard Business School
Alexander S. Gorbenko, Marshall School of Business, University of Southern California
Will Gornall, Sauder School of Business, University of British Columbia
Steven R. Grenadier, Graduate School of Business, Stanford University
Christopher Hennessy, London Business School
Steve N. Kaplan, Booth School of Business, University of Chicago
Akitada Kasahara, Waseda University
Arthur Korteweg, Marshall School of Business, University of Southern California
Lars-Alexander Kuehn, Carnegie-Mellon University
Francis A. Longstaff, Anderson School of Management, UCLA 
Andrey Malenko, Sloan School of Management, MIT
Kjell Nyborg, University of Zurich
Matthew Rhodes-Kropf, MIT Sloan
Kristian Rydqvist, Binghamton University
Stephen M. Schaefer, London Business School
Michael Schwert, Ohio State University
Joshua Spizman, Loyola Marymont University
Toni M. Whited, Ross School of Business, University of Michigan
Baozhong Yang, Georgia State University
Haoxiang Zhu, Sloan School of Management, MIT
Pavel Zryumov, University of Rochester