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Author: Derek Potter Publisher: ISBN: Category : Languages : en Pages :
Book Description
Self-employment and the operation of private businesses form an important sector of the U.S. labor market, accounting for over 400,000 new organizations launched annually in recent years and nearly two-thirds of job creation according to the Small Business Administration. Yet, ownership of a business is fraught with financial risks, leading some economists to suggest that the average lifetime earnings of private business owners trail those of traditional employment. The three essays that follow explore (a) the motives that may drive people to pursue entrepreneurship despite the financial risk, (b) the asset allocation behavior of practicing entrepreneurs, and (c) the resulting satisfaction levels of those who transition into entrepreneurship. The first essay examines a population of users in the pre-launch phase of business development. Past research has suggested that given the lower expected financial returns from entrepreneurship that motivations to launch a business might be driven by preferences for high degrees of autonomy, overly optimistic assessments of financial outcomes, or higher risk preferences. Measures of each of these phenomena are included in a cohesive model guided by the Theory of Planned Behavior along with other relevant variables. Logistic regression predicting intent to launch a business in the future reveals that more general attitudes towards entrepreneurship increase the likelihood of interest in business ownership, while financial motivations are tied to decreased likelihood. The second essay examines the impact of business ownership during the operation of the business. Granted that business owners possess illiquid private organizations, Modern Portfolio Theory might predict that they reduce exposure to other risky asset classes (e.g., stocks). This essay examines stock ownership with consideration given to entrepreneurial status as well as the level of risk exposure stemming from owning a business. Logistic regression using data from the 2016 Survey of Consumer Finances reveals that business owners are less likely to participate in the stock market. An Ordinary Least Squares regression modeling the ratio of equity to total financial assets, however, reveals no significant differences in levels of equity ownership among business owners and the traditionally employed. Collectively, these findings may indicate that entrepreneurs face initial barriers to stock market investment that later fade if participation in the equity market does begin. Finally, the third essay utilizes longitudinal 2008-2014 Health and Retirement Study data to examine levels of job, financial, and life satisfaction. Variable selection is guided by the Job-Demand-Control model, and three random effects cumulative logits are produced. Findings suggest that transitions into entrepreneurship are associated with increased odds of job satisfaction but reduced odds of financial or life satisfaction. Results from these three studies imply that individuals might pursue entrepreneurship for non-financial reasons. However, engaging in the launch of a business could affect financial decision making and asset allocation behavior, as well as subsequent levels of satisfaction with personal finances and life. Implications for organizations and professionals who support prospective entrepreneurs are discussed.
Author: Derek Potter Publisher: ISBN: Category : Languages : en Pages :
Book Description
Self-employment and the operation of private businesses form an important sector of the U.S. labor market, accounting for over 400,000 new organizations launched annually in recent years and nearly two-thirds of job creation according to the Small Business Administration. Yet, ownership of a business is fraught with financial risks, leading some economists to suggest that the average lifetime earnings of private business owners trail those of traditional employment. The three essays that follow explore (a) the motives that may drive people to pursue entrepreneurship despite the financial risk, (b) the asset allocation behavior of practicing entrepreneurs, and (c) the resulting satisfaction levels of those who transition into entrepreneurship. The first essay examines a population of users in the pre-launch phase of business development. Past research has suggested that given the lower expected financial returns from entrepreneurship that motivations to launch a business might be driven by preferences for high degrees of autonomy, overly optimistic assessments of financial outcomes, or higher risk preferences. Measures of each of these phenomena are included in a cohesive model guided by the Theory of Planned Behavior along with other relevant variables. Logistic regression predicting intent to launch a business in the future reveals that more general attitudes towards entrepreneurship increase the likelihood of interest in business ownership, while financial motivations are tied to decreased likelihood. The second essay examines the impact of business ownership during the operation of the business. Granted that business owners possess illiquid private organizations, Modern Portfolio Theory might predict that they reduce exposure to other risky asset classes (e.g., stocks). This essay examines stock ownership with consideration given to entrepreneurial status as well as the level of risk exposure stemming from owning a business. Logistic regression using data from the 2016 Survey of Consumer Finances reveals that business owners are less likely to participate in the stock market. An Ordinary Least Squares regression modeling the ratio of equity to total financial assets, however, reveals no significant differences in levels of equity ownership among business owners and the traditionally employed. Collectively, these findings may indicate that entrepreneurs face initial barriers to stock market investment that later fade if participation in the equity market does begin. Finally, the third essay utilizes longitudinal 2008-2014 Health and Retirement Study data to examine levels of job, financial, and life satisfaction. Variable selection is guided by the Job-Demand-Control model, and three random effects cumulative logits are produced. Findings suggest that transitions into entrepreneurship are associated with increased odds of job satisfaction but reduced odds of financial or life satisfaction. Results from these three studies imply that individuals might pursue entrepreneurship for non-financial reasons. However, engaging in the launch of a business could affect financial decision making and asset allocation behavior, as well as subsequent levels of satisfaction with personal finances and life. Implications for organizations and professionals who support prospective entrepreneurs are discussed.
Author: Yoosef Ghahreman Publisher: ISBN: Category : Electronic dissertations Languages : en Pages : 140
Book Description
My dissertation is focused on the relationship between financial and business decisions of households. The first essay examines how founders of new businesses changed their portfolios in the aftermath of the 2007-2008 financial crisis. Using the Survey of Consumer Finances 2007-2009 panel data, I find evidence that those who became entrepreneurs (entrants) reduced financial portfolio risk compared to those who remained paid employees. I identify a movement away from stockholdings as a result of entry, and provide support for a response to the background risk arising from privately held businesses. Business ownership was also associated with changes in the real estate holdings of entrants. These findings highlight the link between private and public equity markets through entrepreneurs' portfolio choices and introduce a connection between housing and entrepreneurship through changes in home ownership. The second essay studies the trends in angel investment in a representative sample of the U.S. economy and explores the characteristics of these individual private investors. Our results suggest that angel investment is highly concentrated among the wealthiest households, and wealth plays an important role in participation, even among the top 1% of wealth distribution. These wealthy households, who own the majority of the economy's angel equity, increased their participation in the angel investing market during the 1998-2010 period, unaffected by the recessions and financial crisis. In the representative sample, self-employment plays an important role in predicting the incidence of being an angel investor and angel equity share, but the relationship is not as robust for the subsample of the top 1%. Self-reported willingness to take financial risk is generally associated with a higher likelihood of being an angel investor and a larger share of angel equity in different specifications, especially for the 1%. The angels are likely to be more financially disciplined as measured by their credit card balances and how much effort they put into choosing their investments. Angels' affluence, their higher financial discipline and more risk tolerance, together with the relatively low shares of angel equity in the portfolios of most angel investors might suggest calculated risk taking on the part of an average angel investor.
Author: Luisa Alemany Publisher: Cambridge University Press ISBN: 1108421350 Category : Entrepreneurship Languages : en Pages : 647
Book Description
Academics and practitioners from a range of institutions across Europe provide a cutting-edge, practical, and comprehensive review on the financing of entrepreneurial ventures. From sourcing and obtaining funds, to financial tools for growing and managing the financial challenges and opportunities of the startup, Entrepreneurial Finance: The Art and Science of Growing Ventures is an engaging text that will equip entrepreneurs, students and early-stage investors to make sound financial decisions at every stage of a business' life. Largely reflecting European businesses and with a European perspective, the text is grounded in sound theoretical foundations. Case studies and success stories as well as perspectives from the media and from experts provide real-world applications, while a wealth of activities give students abundant opportunities to apply what they have learned. A must-have text for both graduate and undergraduate students in entrepreneurship, finance and management programs, as well as aspiring entrepreneurs in any field.
Author: Ramana Nanda Publisher: ISBN: Category : Languages : en Pages : 152
Book Description
There is growing belief that countries with better financing environments are associated with higher economic growth because they facilitate entrepreneurship and hence the Schumpeterian process of 'creative destruction'. This dissertation explores this hypothesis in more detail by understanding how the financing environment for new ventures impacts outcomes such as individuals' decision to become entrepreneurs, their sources of financing and the growth and survival of their firms. Rather than performing cross-country analyses however, the approach used in this dissertation is to perform within-country studies that shed more light on the mechanisms through which the financing environment impacts entrepreneurial activity. The first two essays in the dissertation exploit institutional reforms - one in Denmark and another in the US - that changed the financing environment for new businesses to study how they impacted individuals' entry and survival. These natural experiments are supplemented with detailed and comprehensive micro data that allow me to both explore and the refine the mechanisms at play in more detail. The final paper is more descriptive in nature and examines how the variation in entrepreneurs' use of Diaspora networks in developing countries is related to the financing and networking environment of the city in which they are based.
Author: Sungjoung Kwon Publisher: ISBN: Category : Entrepreneurship Languages : en Pages : 0
Book Description
In the first essay, I examine what motivates young startup firms to rely on external intellectual property rights. While startups are better suited to exploration than exploitation, I find that approximately 10% of VC-backed companies acquire external patents while still private. They are neither low-quality firms nor firms with low patent output, lending little support to the hypothesis that patent acquisition is a response to low productivity. Rather, patent litigation risk appears to play an important role. Startup firms are significantly more likely to buy external patents when they are sued for patent infringement or exposed to a high threat of litigation. Using a difference-in-differences design around the Supreme Court decision Alice Corp. vs. CLS Bank, I show that firms whose patent litigation risks are reduced the most become significantly less likely to buy patents. Consistent with these findings and with the litigation risk preventing firms from reaching their full potential, firms buying patents are significantly less likely to go public. The second essay (with Michelle Lowry and Yiming Qian) examines mutual fund investments in private firms. Historically, a key advantage of being a public firm was broader access to capital, from a disperse group of shareholders. In recent years, such capital has increasingly become available to private firms as well. We document a dramatic increase over the past twenty years in the number of mutual funds participating in private markets and in the dollar value of these private firm investments. We evaluate several factors that potentially contribute to this trend: firms seeking extra capital to postpone public listing, mutual funds seeking higher risk-adjusted returns and initial public offering (IPO) allocations, and venture capitalists (VCs) seeking new investors to substantiate higher valuations. Results provide the strongest support for the first two factors. The final essay explores potential conflicts of interest in venture capital investments. VC firms occasionally make investments in startups founded by their own employees. The agency hypothesis predicts that this practice is motivated by conflicts of interest-VCs pursue their private benefits by financing themselves or coworkers. Alternatively, the information hypothesis posits that VCs are utilizing their networks-the connection with founders enable VCs to better evaluate the prospects of the venture. Using historical employment data in Crunchbase, I identify connections between entrepreneurs and VC firms. My findings provide strong support for the information hypothesis. Startups raising financing from connected VCs outperform their peers in the long run. VCs exhibit superior investment performance from connected deals, and these deals generate higher demand from other VCs as well. Finally, VCs making investments in connected startups are better able to raise follow-on funds. In sum, my findings suggest that, in the venture capital industry, private benefits from self-dealing is not sufficient enough to outweigh reputation concerns and/or the potential financial compensation from investing in better companies.
Author: Jialong Li Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
This dissertation consists of three essays that explore different areas within the framework of entrepreneurial finance. In my first essay, I investigate the relation between corporate financial distress and earnings management in politically-affiliated private firms in China. I further examine the joint moderating effects of political affiliation and regional development on this relation. The findings suggest that financially-distressed firms engage more in reporting small positive earnings relative to financially-healthy firms. In addition, political affiliation weakens the association between financial distress and small positive earnings management. In the second essay, I intend to shed light on social performance of microfinance institutions (MFIs) with respect to gender equality in MFIs' outreach and promotion of entrepreneurship. Rooted in the principles of homophily and risk aversion, I pinpoint a novel topic which is the association between female leadership in MFIs and their services targeting women clients, and find that when more women serve as managers, board members, and/or loan officers in MFIs, the MFIs increase their outreach to women due to gender affinity. Applying the institutional theory, I also analyze the relationship between MFI's outreach to female borrowers and entrepreneurship in an international setting, and highlight the moderating role played by legal environment in this relationship. Findings indicate that in countries with stronger legal environment, women are more inclined to enter entrepreneurship. In my last essay, I turn to look at family firm, which is perceived to behave quite differently compared with non-family firm. From socioemotional wealth preservation and board experience perspectives, I compile a sample of family-owned and -managed firms on the Standard and Poor's (S&P) 500 Index and examine the effect of family involvement on firm internationalization. The results show that the presence of a family member chairing the board impedes internationalization, but that this negative effect is reduced when board members are highly experienced. I also find that the involvement of multiple generations in the business contributes to the firm's internationalization, and that this effect is more pronounced when firms internationalize to geographically distant rather than closer regions. The contributions and implications of this study are also discussed.
Author: Joseph Alois Schumpeter Publisher: Transaction Publishers ISBN: 9780887387647 Category : Business & Economics Languages : en Pages : 322
Book Description
In addition to the major themes of his life--the place of the entrepreneur in economic development, the risks and rewards of innovation, business cycles and why they occur, and the evolution of capitalism in Europe and America--the essays contain statements on how Schumpeter viewed his own development. They discuss how he looked at Marxism, and how he feared that economics was in danger of becoming too ideological. Several of the essays are classics. In this new edition, Schumpeter's Essays can finally be read with the enjoyment and enlightenment they deserve. The volume is alive to the basic issues of our time.
Author: Derek Potter
Author: Derek Potter
Author: Yoosef Ghahreman
Author: Luisa Alemany
Author: Philippe Christopher Wells
Author: Peter G. Klein
Author: Ramana Nanda
Author: Sungjoung Kwon
Author: Jialong Li
Author: Karl A. Boedecker
Author: Joseph Alois Schumpeter