Syllabus: Theoretical and Empirical Perspectives on Entrepreneurship: Finance
Spring 2021
Wednesday 5:30-8:30
Remote via Zoom
Harvard Business School
TEPE explores scholarly work from economics and finance disciplines regarding
entrepreneurship—the formation and growth of new firms. While work on this topic dates
back to Schumpeter and earlier, academic research regarding entrepreneurship has
exploded over the last decade. Reflecting the complex nature of the entrepreneurship, TEPE
touches on multiple academic disciplines and research methodologies.
There are two complementary doctoral classes, each taught every other year, with the Spring
2021 course focusing on the entrepreneurship research about corporate finance, including
entrepreneurial finance and behavioral economics. The Spring 2022 course focuses on
entrepreneurship and its relationship to economics fields like industrial organization, labor
economics, and economic growth.
Papers are provided via Canvas, the course platform. All students should have access to
Canvas. Students who cannot access the course materials should contact Eric Dunn
(edunn@hbs.edu) to arrange for an alternative way to access the course materials.
There will be some updates to the syllabus and papers as the semester unfolds. An email list
maintained by Eric will provide alerts and materials as appropriate.
Three referee reports will be due over the course of the semester. These are indicated in bold
italics. Each referee report is a recent, unpublished academic paper that is receiving lots of
attention (and is often a recent job market paper). In addition, there will be a final paper
proposal, which can build off work you are doing for another class or your thesis.
Shai Bernstein, Bill Kerr and Josh Lerner will teach all sessions, with guest lectures by Ray
Kluender, Josh Krieger, and Christopher Stanton. The TA for the course is Botir Kobilov
(bkobilov@hbs.edu).
Outline
Class 1: Bernstein (January 27)
Course Introduction: What is entrepreneurial finance and why?
The real effects of entrepreneurial finance
Class 2: Kerr (February 3)
Returns from entrepreneurship
Class 3: Kerr (February 10)
Capital constraints
Class 4: Lerner (February 17)
Banks
Class 5: Kerr (February 24)
Trade credit
Home equity and collateral
Class 6: Bernstein (March 3)
Additional forms of credit
Bankruptcy
Class 7: Lerner (March 10)
Venture capital
Class 8: Lerner/Stanton+Kluender (March 17)
Entrepreneurial finance and market/macro cycles
COVID-19 and Entrepreneurship
Class 9: Lerner (March 24)
Angel investors
Impact investment
3/31: Wellness day (no classes)
Class 10: Bernstein (April 7)
Private equity
Initial public offerings
Class 11: Lerner (April 14)
Behavioral entrepreneurship
Gender, race, and entrepreneurial finance
2
Class 12: Lerner/Krieger (April 21)
Corporate venturing
Class 13: Lerner (April 28)
Student presentations
Preview of TEPE 2021 – Key topics and lessons
3
Class 1: Lerner (January 27)
Course Introduction
Real effects of entrepreneurial finance
Bernstein, Shai, Xavier Giroud, and Richard R. Townsend, 2016, The impact of venture capital
monitoring, Journal of Finance 71:4, 1591-1622
Brown, James, Steven Fazzari, and Bruce Petersen, 2009, Financing innovation and growth: Cash
flow, external equity, and the 1990s R&D boom, Journal of Finance 64:1, 151-185.
Buera, Francisco, Joseph Kaboski, and Yongseok Shin, 2015, Entrepreneurship and financial
frictions: A macrodevelopment perspective, Annual Review of Economics 7:1, 409-436. [Skim]
Gompers, Paul, Josh Lerner, and David Scharfstein, 2005, Entrepreneurial spawning, Journal of
Finance 60:2, 577-614. [Skim]
Hellmann, Thomas and Manju Puri, 2002, Venture capital and the professionalization of start-up
firms: Empirical evidence, Journal of Finance, 57:1, 169-197
Hsu, David, 2004, What do entrepreneurs pay for venture capital affiliation?, Journal of Finance,
59:4, 1805-1844.
Kerr, William, Ramana Nanda, and Matthew Rhodes-Kropf, 2014, Entrepreneurship as
experimentation, Journal of Economic Perspectives, 28:3, 25-48.
Kortum, Samuel, and Josh Lerner, 2000, Assessing the impact of venture capital on innovation,
Rand Journal of Economics 31:4, 674-692.
Nanda, Ramana, and Matthew Rhodes-Kropf, 2013, Investment cycles and startup innovation,
Journal of Financial Economics 110:2, 403-418.
Samila, Sampsa, and Olav Sorenson, 2011, Venture capital, entrepreneurship and economic
growth, Review of Economics and Statistics, 93:1, 338-349.
4
Class 2: Kerr (February 3)
Returns from entrepreneurship
Astebro, Thomas, Jing Chen, and Peter Thompson, 2011, Stars and misfits-self-employment and
labor market frictions, Management Science 57, 1999-2017.
Dillon, Eleanor, and Christopher Stanton, 2018, Self-employment dynamics and the returns to
entrepreneurship, Harvard Business School Working Paper No. 17-022
Galina, Vereshchagina, and Hugo A. Hopenhayn, 2009, Risk taking by entrepreneurs, American
Economic Review 99:5, 1808-1830. [Skim]
Hall, Robert, and Susan Woodward, 2010, The burden of the nondiversifiable risk of
entrepreneurship, American Economic Review 100:3, 1163-1194.
Hamilton, Barton, 2000, Does entrepreneurship pay? An empirical analysis of the returns to self employment, Journal of Political Economy 108:3, 604-631.
Kartashova, K., 2014, Private equity premium puzzle revisited, American Economic Review 104:10,
3297-3334. [Skim]
Levine Ross, and Yona Rubenstein, 2017, Smart and illicit. Who becomes an entrepreneur and do
they earn more?, Quarterly Journal of Economics 132:2, 963-1018.
Manso, Gustavo, 2016, Experimentation and the returns to entrepreneurship, Review of Financial
Studies 29:9, 2319–2340.
Moskowitz, Tobias J., and Annette Vissing-Jorgensen, 2002, The returns to entrepreneurial
investment: A private equity premium puzzle? American Economic Review 92, 745-778. [Skim]
Sarada, 2016, The unobserved returns from entrepreneurship, Working paper. [Skim]
5
Class 3: Kerr (February 10)
Capital constraints: theory
Cagetti, Marco, and Mariacristina De Nardi, 2006, Entrepreneurship, frictions, and wealth, Journal
of Political Economy 114:5, 835-870. [skim]
Evans, David S., and Boyan Jovanovic, 1989, An estimated model of entrepreneurial choice under
liquidity constraints, Journal of Political Economy 97, 808-827.
Holtz-Eakin, Douglas, David Joulfaian, and Harvey S. Rosen, 1994, Sticking it out:
Entrepreneurial survival and liquidity constraints, Journal of Political Economy 102, 53-75.
Stiglitz, Joseph, and Andrew Weiss, 1981, Credit rationing in markets with imperfect information,
American Economic Review 71:3, 393-410. [skim]
Capital constraints: empirics
Anderson, Steffen, and Kasper M. Nielsen, 2012, Ability or finances as constraints on
entrepreneurship? Evidence from survival rates in a natural experiment, Review of Financial
Studies 25:12, 3684-3710.
Greenstone, Michael, Alexandre Mas, and Hoai-Luu Nguyen, 2020, Do credit market shocks affect
the real economy? Quasi-experimental evidence from the Great Recession and 'normal' economic
times, American Economic Journal: Economic Policy 12:1, 200-225.
Hurst, Erik, and Annamaria Lusardi, 2004, Liquidity constraints, household wealth, and
entrepreneurship, Journal of Political Economy 112:2, 319-347.
Olds, Gareth, 2016, College tuition, public finance and new business starts, Harvard Business School
Working Paper, No. 16-145. [skim]
Robb, Alicia, and David T. Robinson, 2014, The capital structure decisions of new firms, Review
of Financial Studies, 27:1, 153-179.
Tsoutsoura, Margarita, 2015, The effect of succession taxes on family firm investment: Evidence
from a natural experiment, Journal of Finance 70:2, 649-688.
6
Class 4: Lerner (February 17)
Banks
Berger, Allen, Nathan Miller, Mitchell Petersen, Raghuram Rajan, and Jeremey Stein, 2005. Does
function follow organizational form? Evidence from the lending practices of large and small banks,
Journal of Financial Economics 76, 237-269.
Black, Bernard, and Ronald Gilson, 1998, Venture capital and the structure of capital markets:
Banks versus stock markets, Journal of Financial Economics 47, 243-277.
Black, Sandra, and Phillip Strahan, 2002, Entrepreneurship and bank credit availability, Journal
of Finance 57:6, 2807-2833. [skim]
Kerr, William, and Ramana Nanda, 2009, Democratizing entry: Banking deregulations, financing
constraints, and entrepreneurship, Journal of Financial Economics 94, 124-149.
Kerr, William, and Ramana Nanda, 2010, Banking deregulations, financing constraints, and firm
entry size, Journal of European Economic Association 8, 582-593.
Nguyen, Hoai-Luu Q., 2019, Are credit markets still local? Evidence from bank branch closings,
American Economic Journal: Applied Economics 11:1, 1-32.
Petersen, Mitchell, and Raghuram Rajan, 1995, The effect of credit market competition on lending
relationships, Quarterly Journal of Economics 110, 407-443.
Petersen, Mitchell, and Raghuram Rajan, 1994, The benefits of lending relationships – Evidence
from small business data, Journal of Finance 49:1, 3-37.
Stein, Jeremy, 2002, Information production and capital allocation: Decentralized versus
hierarchical firms, Journal of Finance 57, 1891-1921. [skim]
7
Class 5: Kerr (February 24)
Trade credit
Barrot, Jean-Noel, 2016, Trade credit and industry dynamics: Evidence from trucking firms,
Journal of Finance 71:5, 1975-2016.
Barrot, Jean-Noel, and Ramana Nanda, 2020, The employment effects of faster payment: Evidence
from the Federal Quickpay Reform, Journal of Finance 75:6, 3139-3173.
Fisman, Raymond, and Inessa Love, 2003, Trade credit, financial intermediary development and
industry growth, Journal of Finance 58, 353-374.
Home equity, collateral, and entry
Adelino, Manuel, Antoinette Schoar, and Felipe Severino, 2015, House prices, collateral and self employment, Journal of Financial Economics 117:2, 288-306.
Gentry, William M., and R. Glenn Hubbard, 2000, Entrepreneurship and household saving,
Advances in Economic Analysis and Policy 4, article #1053.
Jensen, Thais, Soren Leth-Petersen, and Ramana Nanda, 2014, Housing collateral, credit
constraints and entrepreneurship: Evidence from a mortgage reform, Working paper no. 20583,
National Bureau of Economic Research. [skim]
Kerr, Sari, William Kerr, and Ramana Nanda, 2020, House prices, home equity and
entrepreneurship: Evidence from U.S. census micro data. Harvard, Harvard Business School
Working Paper, No. 15-069.
Schmalz, Martin C., David A. Sraer and David Thesmar, 2017, Housing collateral and
entrepreneurship, Journal of Finance 72:1, 99-132.
Referee Report 1 (DUE): Christopher M. Lako, 2019, The Long-Run Effects of Mortgage Credit
Access on Entrepreneurship, Unpublished working paper.
8
Class 6: Bernstein (March 3)
Additional forms of credit
Chatterji, Aaron, and Robert Seamans, 2012, Entrepreneurial finance, credit cards and race,
Journal of Financial Economics 106:1, 182-95.
Davis, Jesse, Adair Morse, and Xinxin Wang, 2020, The leveraging of Silicon Valley: Venture
debt in the innovation economy, Paper No. 18-16, Kenan Institute of Private Enterprise Research.
Howell, Sabrina, 2017, Financing innovation: Evidence from R&D grants, American Economic
Review 107:4, 1136–1164.
Mollick, Ethan, and Ramana Nanda, 2016, Wisdom or madness? Comparing crowds with expert
evaluation in funding the arts, Management Science 62:6, 1533-1553.
Bankruptcy
Acharya, Viral, and Krishnamurthy Subramanian, 2009, Bankruptcy codes and innovation, Review
of Financial Studies 22, 4949-4988.
Bernstein, Shai, Emauele Colonnelli, Xavier Giroud, and Benjamin Iverson, 2019, Bankruptcy
spillovers, Journal of Financial Economics 133:3, 608-633.
Bernstein, Shai, Emanuele Colonnelli, and Benjamin Iverson, 2019, Asset allocation in
bankruptcy, Journal of Finance 74, 5-53.
Berkowitz, Jeremy, and Michelle J. White, 2004, Bankruptcy and small firms’ access to credit,
Rand Journal of Economics 35, 69-84.
Cerqueiro, Geraldo, Deepak Hegde, María Fabiana Penas, and Robert Seamans, 2017, Debtor rights,
credit supply, and innovation, Management Science 63:10, 3147-3529.
9
Class 7: Lerner (March 10)
Venture capital
Bernstein, Shai, Arthur Korteweg, and Kevin Laws, 2017, Attracting early stage investors:
Evidence from a randomized field experiment, Journal of Finance 72:2, 509-538.
Chemmanur, Thomas, Karthik Krishnan, and Debarshi Nandy, 2011, How does venture capital
financing improve efficiency in private firms? A look beneath the surface, Review of Financial
Studies 24:12, 4037-4090.
Gompers, Paul A., Will Gornall, Steven N. Kaplan, and Ilya A. Strebulaev, 2020, How do venture
capitalists make decisions?, Journal of Financial Economics, 135:1, 169-190.
Kaplan, Steven, Berk Sensoy, and Per Strömberg, 2009, Should investors bet on the jockey or the
horse: Evidence from the evolution of firms from early business plans to public companies, Journal
of Finance 64:1, 75-115.
Kaplan, Steven, and Per Strömberg, 2003, Financial contracting theory meets the real world: An
empirical analysis of venture capital contracts, Review of Economic Studies 70, 281-315.
Maats, Frederike, Andrew Metrick, Ayako Yasuda, Brian Hinkes, and Sofia Vershovski, 2011, On
the consistency and reliability of venture capital databases, Unpublished working paper.
10
Class 8: Lerner/Kluender+Stanton (March 17)
Entrepreneurship and Market/Macro Cycles
Babina, Tania, forthcoming, Destructive creation at work: How financial distress spurs
entrepreneurship, Review of Financial Studies.
Barlevy, Gadi, 2007, On the cyclicality of research and development, American Economic
Review 97:4, 1131-1164. [skim]
Manso, Gustavo, Benjamin Balsmeier, and Lee Fleming, 2019, Heterogeneous innovation and the
antifragile economy, Unpublished working paper.
Ljungqvist, Alexander, and William J. Wilhelm Jr., 2003, IPO Pricing in the dot‐com bubble,
Journal of Finance 58:2, 723-752
Howell, Sabrina T., Josh Lerner, Ramana Nanda, and Richard R. Townsend, 2020, Financial
distancing: How venture capital follows the economy down and curtails innovation, National
Bureau of Economic Research Working Paper No. 27150.
COVID-19 and Entrepreneurship
Balla-Elliott, Dylan, Zoë B. Cullen, Edward L. Glaeser, Michael Luca, and Christopher Stanton,
2020, Business reopening decisions and demand forecasts during the COVID-19 pandemic,"
NBER Working Paper No. 27362.
Bartik, Alexander, Zoë B. Cullen, Edward L. Glaeser, Michael Luca, Christopher Stanton, and Adi
Sunderam, 2020, The targeting and impact of Paycheck Protection Program loans to small
businesses." Harvard Business School Working Paper, No. 21-021, August 2020. View Details
Bartik, Alexander, Marianne Bertrand, Zoë B. Cullen, Edward L. Glaeser, Michael Luca, and
Christopher Stanton. 2020. The impact of COVID-19 on small business outcomes and
expectations, Proceedings of the National Academy of Sciences 117:30, 17656-66.
Greenwood, Robin, Benjamin Iverson, and David Thesmar, 2020, Sizing up corporate
restructuring in the COVID crisis, National Bureau of Economic Research Working Paper No.
28104.
Wang, Jialan, Jeyul Yang, Benjamin Iverson, and Ray Kluender, 2020, Bankruptcy and the
COVID-19 crisis, Harvard Business School Working Paper, No. 21-041.
11
Class 9: Lerner (March 24)
Angel investors
Agrawal, Ajay, Christian Catalini, and Avi Goldfarb, 2011, The geography of crowd -funding,
Working paper no. 16820, National Bureau of Economic Research,
Goldfarb, Brent, Gerard Hoberg, David Kirsch, and Alexander Triantis, 2014, Are angels preferred
venture investors?, Unpublished working paper.
Howell, Sabrina, Marina Niessner and David Yermack, 2020, Initial coin offerings: Financing
growth with cryptocurrency token sales, Review of Financial Studies 33:9, 3925–74,
Lerner, Josh, Antoinette Schoar, Stanislav Sokolinski, and Karen Wilson, 2018,,The globalization
of angel investing: Evidence across countries, Journal of Financial Economics, 127:1, 1-20.
Lamoreaux, Naomi R., Margaret Levenstein, and Kenneth L. Sokoloff, 2004, Financing invention
during the second Industrial Revolution: Cleveland, Ohio, 1870-1920, National Bureau of
Economic Research Working Paper No. 10923.
Impact investing
Brad M. Barber, Adair Morse, Ayako Yasuda, forthcoming, Impact investing, Journal of Financial
Economics.
Geczy, Christopher C., Jessica Jeffers, David K. Musto, and Anne M. Tucker, forthcoming,
Contracts with (social) benefits: The implementation of impact investing, Journal of Financial
Economics.
Kovner, Anna, and Josh Lerner, 2015, Doing well by doing good? Community development
venture capital, Journal of Economics & Management Strategy, 24:3, 643-663.
Referee Report 2 (DUE): Allen Hu and Song Ma, 2020, Persuading investors: A video-based
study, Unpublished working paper.
12
Class 10: Bernstein (April 7)
Private equity
Axelson, Ulf, Tim Jenkinson, Per Strömberg, and Michael Weisbach, 2013, Borrow cheap, buy
high? Determinants of leverage and pricing in buyouts, Journal of Finance 68:6, 2223–67.
Bernstein, Shai, and Albert Sheen. 2016, The operational consequences of private equity buyouts:
Evidence from the restaurant industry, Review of Financial Studies 29:9, 2387-2418.
Davis, Steven J., John Haltiwanger, Kyle Handley, Ron Jarmin, Josh Lerner, and Javier Miranda,
2014, Private equity, jobs, and productivity, American Economic Review 104:12, 3956-90
Harris, Robert, Tim Jenkinson, and Steven Kaplan, 2014, Private equity performance: What do we
know? Journal of Finance 69:5, 1851-1882.
Kaplan, Steven N. and Per Strömberg, 2009, Leveraged buyouts and private equity, Journal of
Economic Perspectives 23:1, 121-146.
Lerner, Josh, Jason Mao, Antoinette Schoar, and Nan Zhang, 2018, Investing outside the box:
Evidence from alternative vehicles in private capital, Working Paper No. 24941, National Bureau
of Economic Research.
Initial public offerings
Bernstein, Shai, 2015, Does going public affect innovation?, Journal of Finance 70:4, 1365-1403.
Bernstein, Shai, Abhishek Dev, and Josh Lerner, 2018, The creation and evolution of
entrepreneurial public markets, Unpublished working paper.
Doidge, Craig, G. Andrew Karolyi, and René M. Stulz, 2017, The U.S. listing gap, Journal of
Financial Economics 123:3, 464-487.
Ewens, Michael, and Joan Farre-Mensa. forthcoming, The deregulation of the private equity
markets and the decline in IPOs, Review of Financial Studies.
Ferreira, Daniel, Gustavo Manso, and Andre Silva, 2014, Incentives to innovate and the decision
to go public or private, Review of Financial Studies 27, 256-300.
Gao, Xiaohui, Jay Ritter, and Zhongyan Zhu, 2013, Where have all the IPOs gone?, Journal of
Financial and Quantitative Analysis 48:6, 1663-1692.
Pagano, Marco, Fabio Panetta, and Luigi Zingales, 1998, Why do companies go public? An
empirical analysis, Journal of Finance 53:1, 27-64.
13
Class 11: Lerner/Krieger (April 14)
Corporate venturing (1)
Aghion, Philippe, and Jean Tirole, 1994, On the management of innovation, Quarterly Journal of
Economics 109, 1185-1207.
Akcigit, Ufuk, Salome Baslandze, and Francesca Lotti, 2018, Connecting to power: Political
connections, innovation, and firm dynamics, National Bureau of Economic Research Working
Paper No. 25136.[Skim]
Chemmanur, Thomas, Elena Loutskina, and Xuan Tian, 2014, Corporate venture capital, value
creation, and innovation, Review of Financial Studies 27:8, 2434-2473.
Hellmann, Thomas, and Enrico Perotti, 2011, The circulation of ideas in firms and markets,
Management Science 57, 1813-1826.
Kerr, William, and Ramana Nanda, 2015, Financing innovation, Annual Review of Financial
Economics 7, 445-462. [Skim]
Ma, Song, 2020, The life cycle of corporate venture capital, Review of Financial Studies, 33:1,
358–394.
Manso, Gustavo, 2011, Motivating innovation, Journal of Finance 66, 1823-1869.
Seru, Amit, 2014, Firm boundaries matter: Evidence from conglomerates and R&D activity, Journal
of Financial Economics 111:2, 381-405. [skim]
Corporate venturing (2)
Cunningham, Colleen, Florian Ederer, and Song Ma, 2020, Killer acquisitions, Journal of Political
Economy, forthcoming.
Kreiger, Josh, 2020, Trials and terminations: Learning from competitors' R&D failures, Management
Science, forthcoming.
Kreiger, Josh, Danielle Li, and Dimitris Papanikolaou, 2020, Missing novelty in drug development,
Review of Financial Studies, forthcoming.
14
Class 12: Lerner (April 21)
Behavioral entrepreneurship
Åstebro, Thomas, Holger Herz, Ramana Nanda, and Roberto Weber, 2014, Seeking the roots of
entrepreneurship: Insights from behavioral economics, Journal of Economic Perspectives 28:3,
49-70.
Bernardo, Antonio, and Ivo Welch, 2001, On the evolution of overconfidence and
entrepreneurship, Journal of Economics and Management Strategy 10, 301-330.
Landier, Augustin, and David Thesmar, 2009, Contracting with optimistic entrepreneurs: Theory
and evidence, Review of Financial Studies 22, 117-150.
Lerner, Josh, and Ulrike Malmendier, 2013, With a little help from my (random) friends: Success
and failure in post-business school entrepreneurship. Review of Financial Studies 26:10, 24112452.
Lindquist, Matthew J., Joeri Sol, and Mirjam Van Praag, 2015, Why do entrepreneurial parents
have entrepreneurial children?, Journal of Labor Economics 33:2, 269-296.
Gender, race, and entrepreneurship
Ewens, Michael and Richard R. Townsend, 2020, Are early stage investors biased against
women?, Journal of Financial Economics, 135:3, 653-677.
Gompers, Paul A., and Sophie Q. Wang, 2017, And the children shall lead: gender Diversity and
performance in venture capital, National Bureau of Economic Research working paper 23454.
Gornall, Will, and Ilya A. Strebulaev, 2019, Gender, race, and entrepreneurship: A randomized
field experiment on venture capitalists and angels
15
Class 13: Lerner (April 28)
Paper presentations
Preview of TEPE 2022 – key topics and lessons
Referee Report 3 (DUE): Menaka Hampole, 2020, The effect of student debt on entrepreneurship:
Evidence from online social networks, Unpublished working paper.
16