Antoinette Schoar

• Massachusetts Institute of Technology

How are contracts structured in the presence of relationship-specific investments when legal enforcement is weak? Using a new audit methodology, we show that simple financial contracts in combination with social norms and reputation concerns can sustain relationship-specific transactions. Wholesalers in the market for pens in India use upfront paym...

Tracking the movement of top managers across firms, we document the importance of manager-specific fixed effects in explaining heterogeneity in firm exposures to systematic risk. In equilibrium, manager fixed effects on systematic risk are positively related with manager fixed effects on stock returns. These differences in systematic risk are parti...

Using previously unexplored custodial data, we examine alternative investment vehicles (AVs) in private equity (PE) funds over the last four decades. By 2017, AVs reached 40% of all PE commitments. Average AV performance matches the PE market, but underperforms the main funds of the partnerships sponsoring the AVs. Limited partners (LPs) with bette...

We evaluate the effect of downside insurance on self‐employment. We exploit a large‐scale reform of French unemployment benefits that insured unemployed workers starting businesses. The reform significantly increased firm creation without decreasing the quality of new entrants. Firms started postreform were initially smaller, but their employment g...

Cryptocurrency markets exhibit periods of large, recurrent arbitrage opportunities across exchanges. These price deviations are much larger across than within countries, and smaller between cryptocurrencies, highlighting the importance of capital controls for the movement of arbitrage capital. Price deviations across countries co-move and open up i...

We ask which markets drive bitcoin prices and how price discovery happens across different exchanges. Does the greater exuberance for cryptocurrencies outside the United States affect prices only on local markets or does it impact price formation on global cryptocurrency markets? We document significant heterogeneity in which price formation happen...

Ten years after the financial crisis of 2008, there is widespread agreement that the boom in mortgage lending and its subsequent reversal were at the core of the Great Recession. We survey the existing evidence, which suggests that inflated house-price expectations across the economy played a central role in driving both the demand for and the supp...

Using plant-level data from France, we document a potential cost of political connections for firms that is not offset by other benefits. Politically connected CEOs alter corporate employment decisions to help (regional) politicians in their re-election efforts by having higher job and plant creation rates, and lower rates of destruction in electio...

This paper documents a number of key facts about the evolution of mortgage debt, homeownership, debt burden, and subsequent delinquency during the recent housing boom and Great Recession. We show that the mortgage expansion was shared across the entire income distribution; that is, the flow and stock of debt rose across all income groups (except fo...

Cryptocurrency markets exhibit periods of large, recurrent arbitrage opportunities across exchanges. These price deviations are much larger across than within countries, and smaller between cryptocurrencies, highlighting the importance of capital controls for the movement of arbitrage capital. Price deviations across countries co-move and open up i...

A randomized control trial with 432 small and medium enterprises in Mexico shows positive impact of access to 1 year of management consulting services on total factor productivity and return on assets. Owners also had an increase in “entrepreneurial spirit” (an index that measures entrepreneurial confidence and goal setting). Using Mexican social s...

This paper examines the role of investments by angel groups across a heterogeneous set of 21 countries with varying entrepreneurship ecosystems. Exploiting quasi-random assignment of deals around the groups’ funding thresholds, we find a positive impact of funding on firm growth, performance, survival, and follow-on fundraising, which is independen...

We show that economic conditions when managers enter the labor market have long-run effects on their career paths and managerial styles. Managers who began their careers during recessions become CEOs more quickly, but at smaller firms. They also have more conservative styles, such as lower investment in capital expenditures and research and develop...

This paper highlights the importance of middle-class and high-FICO borrowers for the mortgage crisis. Contrary to popular belief, which focuses on subprime and poor borrowers, we show that mortgage originations increased for borrowers across all income levels and FICO scores. The relation between mortgage growth and income growth at the individual...

We study how investors perceive the skill set that different types of CEOs bring into their companies. We compare CEOs who started their careers during a recession with other CEOs. We show that the announcement return around the appointment of a recession CEO is very significant and positive, and this positive market reaction is driven by cases whe...

Using a survey of 800 Chief Executive Officers (CEOs) in 22 emerging economies, we show that CEOs' management styles and philosophies vary with the ownership and governance structure of their firms. Founders and CEOs of firms with greater family involvement display a greater stakeholder focus, and feel more accountable to employees and banks than t...

This paper examines investments made by 13 angel groups across 21 countries. We compare applicants just above and below the funding cutoff and find that these angel investors have a positive impact on the growth, performance, and survival of firms as well as their follow-on fundraising. The positive impact of angel financing is independent of the l...

This article documents the fact that ventures funded by two successful angel groups experience superior outcomes to rejected ventures: They have improved survival, exits, employment, patenting, Web traffic, and financing. We use strong discontinuities in angel- funding behavior over small changes in their collective interest levels to implement a r...

We study the credit supply effects of the unexpected freeze of the European interbank market, using exhaustive Portuguese loan-level data. We find that banks that rely more on interbank borrowing before the crisis decrease their credit supply more during the crisis. The credit supply reduction is stronger for firms that are smaller, with weaker ban...

We show that economic conditions when CEOs enter the labor market have lasting impact on their career paths and managerial styles. Recession CEOs take less time to become CEOs, but manage smaller firms, receive lower compensation, and move less across firms and industries. They also display more conservative styles: lower capital expenditures and R...

This paper documents the role of the collateral lending channel to facilitate small business starts and self-employment in the period before the financial crisis of 2008. We document that between 2002 and 2007 areas with a bigger run up in house prices experienced a strong increase in employment in small businesses compared to employment in large f...

We study a large-scale French reform that provided generous downside insurance for unemployed individuals starting a business. We study whether this reform affects the composition of people who are drawn into entrepreneurship. New firms started in response to the reform are, on average, smaller, but have similar growth expectations and education le...

There is substantial heterogeneity in the structure of trading relationships in the U.S. overnight interbank lending market: Some banks rely on spot transactions, while most form stable, concentrated borrowing relationships to hedge liquidity needs. As a result, borrowers pay lower prices and borrow more from their concentrated lenders. Exogenous s...

We study the credit supply effects of the unexpected freeze of the European interbank market, using exhaustive Portuguese loan-level data. We find that banks that rely more on interbank borrowing before the crisis decrease their credit supply more during the crisis. The credit supply reduction is stronger for firms that are smaller, with weaker ban...

We show that the cost of employee turnover in firms that rely on decentralized knowledge and personal relationships depends on the firms' planning horizons and the departing employees' incentives to transfer information. Using exogenous shocks to the relationship between borrowers and loan officers, we document that borrowers whose loan officers ar...

We show that easier access to credit significantly increases house prices by using exogenous changes in the conforming loan limit as an instrument for lower cost of financing. Houses that become eligible for financing with a conforming loan show an increase in house value of 1.16 dollars per square foot (for an average price per square foot of 220...

This paper examines frictions in contract renegotiation and its implications for allocative efficiency of contracts. Using a novel audit study methodology, we find that contracting parties in general are reluctant to engage in hold up. However, many efficient renegotiations of contracts also do not happen for the fear of being seen as extracting su...

We examine the relevance of search costs and the transmission of liquidity shocks in the US overnight interbank market. There is large and persistent heterogeneity in how banks transact in this market: while some banks mainly rely on spot transactions, most form stable relationships with at least one lending counterparty. Our results suggest that b...

This paper documents a widely overlooked dimension of relationship lending: the personal interaction between the borrower and the lender reduces the willingness of the borrower to engage in moral hazard and default on the loan officer. We conduct a randomized experiment with small business borrowers of the largest commercial bank in India to test t...

Do financial advisers undo or reinforce the behavioral biases and misconceptions of their clients? We use an audit methodology where trained auditors meet with financial advisers and present different types of portfolios. These portfolios reflect either biases that are in line with the financial interests of the advisers (e.g., returns-chasing port...

We test whether managerial human capital has a first order effect on the performance and growth of small enterprises in emerging markets. In a randomized control trial in Puebla, Mexico, we randomly assigned 150 out of 432 small and medium size enterprises to receive subsidized consulting services, while the remaining 267 enterprises served as a co...

This paper argues that it is crucially important to differentiate between two very distinct sets of entrepreneurs: subsistence and transformational entrepreneurs. Recent evidence suggests that people engaging in these two types of entrepreneurship are not only very distinct in nature but that only a negligible fraction of them transition from subsi...

No abstract available.

No abstract available.

No abstract available.

No abstract available.

Chit Funds are indigenous financial institutions in India that combines credit and savings in a single scheme. In a chit fund scheme, a group of individuals come together for a predetermined time period and contribute to a common pool at regular intervals. In order to understand the intricacies of the chit fund model in India, we studied the size o...

In this paper I investigate whether firms' physical investments react to the speculative over-pricing of their securities. I introduce investment considerations in an infinite horizon continuous time model with short sale constraints and heterogeneous beliefs along the lines of Scheinkman and Xiong (2003). I obtain closed form solutions for all qua...

Using a new database of the compensation terms, ownership structures (capital commitments), and quarterly cash flows for a large sample of buyout and venture cap-ital private equity funds from 1984-2010, we investigate the determinants of manager compensation and ownership and how these contract terms relate to the funds' cash flow performance. Mar...

Using a new database of the compensation terms, ownership structures (capital commitments), and quarterly cash flows for a large sample of private equity funds from 1984-2010, we investigate the determinants of manager compensation and ownership and how these contract terms relate to the funds' cash flow performance. Market conditions during fundra...

This paper examines the extent to which the corporate governance structure of a firm arises endogenously in response to its performance. We demonstrate that following periods of abnormally good performance, managers are more likely to call special meetings and to propose and pass governance measures that are contrary to shareholder interests (based...

We report the results from a field experiment with a micro lender in Uganda to test the effectiveness of privately implemented incentives for loan repayment. Using a randomized control trial we measure the impact of three different treatments: Borrowers are either given a lump sum cash reward upon completion of the loan (equivalent to a 25% interes...

In this paper we test whether procrastination and planning problems affect the performance, compensation and work satisfaction among employees. We conducted a randomized controlled experiment with a bank in Colombia to change the frequency and intensity with which employees received reminders about goal achievements. We also provided small in-kind...

We examine the relevance of search costs and the transmission of liquidity shocks in the US overnight interbank market. There is large and persistent heterogeneity in how banks form borrowing relationships in this market: while some banks mainly rely on spot transactions, most form stable borrowing relationships with at least one lender. These lend...

Individuals and business owners engage in an increasingly complex array of financial decisions that are critical for their success and well-being. Yet a growing literature documents that in both developed and developing countries, a large fraction of the population is unprepared to make these decisions. Evidence on potential remedies is limited and...

Since debt is typically riskier in recessions, transfers from equity holders to debt holders associated with each investment also tend to concentrate in recessions. Such systematic risk ex-posure of debt overhang has important implications for the investment and financing decisions of firms and on the ex ante costs of debt overhang. Using a calibra...

This chapter explores the role of entrepreneurial culture in determining contractual outcomes among entrepreneurs in countries where the legal environment makes contracts very difficult to enforce. Entrepreneurs from different communities vary in how they conduct business and negotiate contracts. Culture is an important factor in explaining how peo...

What capital is missing in developing countries? We put forward “managerial capital,” which is distinct from human capital, as a key missing form of capital in developing countries. And it has also been curiously missing in the research on growth and development. We argue in this paper that lack of managerial capital has broad implications for firm...

This paper examines the impact of the financial crisis of 2008, specifically the bankruptcy of Lehman Brothers, on the federal funds market. Rather than a complete collapse of lending in the presence of a market-wide shock, we see that banks became more restrictive in their choice of counterparties. Following the Lehman bankruptcy, we find that amo...

This paper documents the role of angel funding for the growth, survival, and access to follow-on funding of high-growth start-up firms. We use a regression discontinuity approach to control for unobserved heterogeneity between firms that obtain funding and those that do not. This technique exploits that a small change in the collective interest lev...

This paper studies changes in fund ows for U.S. equity mutual funds and the implications of such changes for managers' risk-shifting behavior. Contrary to the common view that the ow-performance relationship is convex, I show that it is concave in highly volatile markets, where good performance is attributable to luck instead of skills. As a result...

This paper explores how the relationship specificity of the investment affects the ex-ante structure of contracts and the ex-post resolution of an ensuing holdup problem. We set up a field experiment in the wholesale market for pens in India where we sent entrepreneurs as auditors to procure large orders of pens from wholesale dealers. We vary the...

Whom a CEO knows has a substantial impact on pay. An additional connection to an executive or director outside the firm increases a CEO"s compensation by over $17,000 on average, and explains about 10% of total pay. An additional premium is associated with "important" members: insiders at other firms, geographically local connections, or those with...

This paper examines the direct private equity investment strategies across sovereign wealth funds and their relationship to the funds’ organizational structures. SWFs seem to engage in a form of trend chasing, since they are more likely to invest at home when domestic equity prices are higher, and invest abroad when foreign prices are higher. Funds...

This paper tests the ability of structural models of default to price corporate bonds in the cross-section. I …nd that the Black-Cox model can explain 45% of the cross-sectional variation in observed yield spreads. The unexplained variation cannot be attributed solely to non-credit components. Speci…cally, unexplained yield spreads are related to c...

In a 40-plus year career notable for path-breaking work on capital structure and innovations in capital budgeting and valuation, MIT finance professor Stewart Myers has had a remarkable influence on both the theory and practice of corporate finance. In this article, two of his former students, a colleague, and a co-author offer a brief survey of Pr...

How does the structure of the families behind business groups affect the group's organization, governance, and performance? We construct a unique dataset of family trees and business groups for 93 of the largest business families in Thailand. We find a strong positive association between family size and family involvement in the ownership and contr...

University endowments have received much attention recently for their superior investment returns compared with other institutional investors. This study documents trends in college and university endowment returns and investments in the United States between 1992 and 2005 using data on over a thousand schools. Such endowments have generally perfor...

The Chapter 11 Bankruptcy Database includes data on U.S. Chapter 11 cases, including filed motions, objections and judicial rulings. Download the slides at: http://papers.ssrn.com/paper=1028255 Download the audio file at: http://papers.ssrn.com/paper=1029801

The Chapter 11 Bankruptcy Database includes data on U.S. Chapter 11 cases, including filed motions, objections and judicial rulings.

The Chapter 11 Bankruptcy Database includes data on U.S. Chapter 11 cases, including filed motions, objections and judicial rulings.

We investigate how the deregulation of the French banking industry in the 1980s affected the real behavior of firms and the structure and dynamics of product markets. Following deregulation, banks are less willing to bail out poorly performing firms and firms in the more bank-dependent sectors are more likely to undertake restructuring activities....

seminar participants at MIT and the University of Oklahoma for their comments. We also thank Ted Reeve for providing us with his derivative surveys of gold mining firms, and Sridhar Gogineni and Leung Kam Ming for excellent research assistance. We are responsible for any remaining errors.

The returns that institutional investors realize from private equity differ dramatically across institutions. Using detailed, hitherto unexplored records, we document large heterogeneity in the performance of investor classes: endowments' annual returns are nearly 21% greater than average. Analysis of reinvestment decisions suggests that endowments...

History is replete with examples of spectacular ascents of family businesses. Yet there are also numerous accounts of family businesses brought down by bitter feuds among family members, disappointed expectations between generations, and tragic sagas of later generations unable to manage their wealth. A large fraction of businesses throughout the w...

This paper uses case information on Chapter 11 filings for almost 5000 private companies across five district courts in the US between 1989 and 2004. We first establish that within districts cases are assigned randomly to judges, which allows us to estimate judge specific fixed eects in their Chapter 11 rulings. We find very strong and economically...

This paper uses case information on Chapter 11 filings for almost 5000 private companies across five district courts in the US between 1989 and 2004. We first establish that within districts cases are assigned randomly to judges, which allows us to estimate judge specific fixed eects in their Chapter 11 rulings. We find very strong and economically...

The returns that institutional investors realize from private equity investments differ dramatically across institutions. Using detailed and hitherto unexplored records of fund investors and performance, we document large heterogeneity in the performance of different classes of limited partners. In particular, endowments' annual returns are nearly...

Analyzing 210 developing country private equity investments, we find that transactions vary with nations' legal enforcement, whether measured directly or through legal origin. Investments in high enforcement and common law nations often use convertible preferred stock with covenants. In low enforcement and civil law nations, private equity groups t...

This paper investigates the performance and capital inflows of private equity partnerships. Average fund returns (net of fees) approximately equal the S&P 500 although substantial heterogeneity across funds exists. Returns persist strongly across subsequent funds of a partnership. Better performing partnerships are more likely to raise follow-on fu...

Families run a large fraction of business groups around the world. In this paper, we analyze how the structure of the families behind these business groups affects the groups' organization, governance and performance. To address this question, we constructed a unique data set of family trees and business groups for nearly 100 of the largest busines...