Paul P. Momtaz

University of California, Los Angeles | UCLA · Anderson School of Management

Sustainability orientation has a positive effect on startups' initial valuation and a negative effect on their post-funding financial performance. All else equal, improving sustainability orientation by one standard deviation increases startups' funding amount by 28 % and decreases investors' abnormal returns per post-funding year by 16 %. The resu...

Blockchain technology and smart contracts are catalysts for decentralization and disintermediation. These new technologies reduce transaction costs, agency costs, and offer a basis for trustless social and economic interactions. They are fueling new business models for decentralized platforms and have revolutionized crowdfunding. A recent trend, De...

Recent research finds that whether or not ventures publish video pitches during crowdfunding campaigns affects their funding success. Little is known, however, about how and why video pitches help startups achieve higher valuations. To close this gap, we analyze metrics and the content of video pitches published along blockchain-based crowdfunding...

Blockchain-based tokens are widely acknowledged as a new asset class. Tokens allow new ventures to raise financing from crowd-investors on public blockchains. The information stored on these public ledgers makes it possible to examine the crowd’s investment behavior, as well as the financial returns to individual investors in the cross-section of t...

The Metaverse refers to a shared vision among technology entrepreneurs of a three-dimensional virtual world, an embodied internet with humans and the physical world in it. As such, the Metaverse is thought to expand the domain of human activity by overcoming spatial, temporal, and resource-related constraints imposed by nature. The technological in...

This paper examines rent sharing in private investments in public equity (PIPEs) between newly public firms and private investors. The evidence suggests highly asymmetric rent sharing. Newly public firms earn a negative return of up to −15% in the first post-PIPE year, while investors benefit due to the ability to dictate transaction terms. The res...

New Venture Teams' (NVTs') collective emotions impact startup valuations through their intensity and diversity. I identify NVTs' affective traits with artificial emotional intelligence by tracking 2,520 individuals across 165 NVTs during their Initial Coin Offerings (ICOs). The level of NVTs' negative affects correlates with lower valuations, while...

This paper assesses the market effects of regulatory events associated with the implementation of a bail-in regime for failing European banks. The bail-in regime was designed to make banks efficiently resolvable in order to abolish Implicit Government Guarantees (IGGs). We use a seemingly-unrelated-regressions framework to estimate the effects on C...

Crypto Funds (CFs) represent a novel investor type in entrepreneurial finance. CFs intermediate Decentralized Finance (DeFi) markets by pooling contributions from crowd-investors and investing in tokenized startups, combining sophisticated venture-and hedge-style investment strategies. We compile a unique dataset combining token-based crowdfunding...

How efficient is Decentralized Finance (DeFi)? To answer this question, we study the efficiency and the role of intermediation in a large DeFi segment, namely, the market for Initial Coin Offerings (ICOs). In particular, we advance a search-related theory of DeFi, in which search frictions partly offset the efficiency gains from reduced transaction...

The Metaverse refers to a shared vision among technology entrepreneurs of a three-dimensional virtual world, an embodied internet with humans and the physical world in it. As such, the Metaverse is thought to expand the domain of human activity by overcoming spatial, temporal, and resource-related constraints imposed by nature. The technological in...

Crypto Funds (CFs) represent a novel investor type in entrepreneurial finance. CFs intermediate Decentralized Finance (DeFi) markets by pooling contributions from crowd-investors and investing in tokenized startups, combining sophisticated venture-and hedge-style investment strategies. We compile a unique dataset combining token-based crowdfunding...

Blockchain technology and smart contracts are catalysts for decentralization anddisintermediation. These new technologies reduce transaction costs, agency, and offer a basis for trustless social and economic interactions. They are fueling new business models for de-centralized platforms and have revolutionized crowdfunding. A recent trend, Decentra...

This paper examines rent sharing in Private Investments in Public Equity (PIPEs) between newly public firms and private investors. The evidence suggests highly asymmetric rent sharing. Newly public firms earn a negative return of up to-15% in the first post-PIPE year, while investors benefit due to the ability to dictate transaction terms. The resu...

This paper introduces a machine learning approach to quantify altruism from the linguistic style of textual documents. We apply our method to a central question in (social) entrepreneurship: How does altruism impact entrepreneurial success? Specifically, we examine the effects of altruism on crowdfunding outcomes in Initial Coin Offerings (ICOs). T...

This paper examines rent sharing in Private Investments in Public Equity (PIPEs) be-tween newly public firms and private investors. The evidence suggests highly asym-metric rent sharing. Newly public firms earn a negative return of up to –15% in the firstpost-PIPE year, while investors benefit due to the ability to dictate transaction terms.The res...

This paper examines rent sharing in Private Investments in Public Equity (PIPEs) between newly public firms and private investors. The evidence suggests highly asymmetric rent sharing. Newly public firms earn a negative return of up to -15% in the first post-PIPE year, while investors benefit due to the ability to dictate transaction terms. The res...

This paper examines rent sharing in Private Investments in Public Equity (PIPEs) between newly public firms and private investors. The evidence suggests highly asymmetric rent sharing. Newly public firms earn a negative return of up to -15% in the first post-PIPE year, while investors benefit due to the ability to dictate transaction terms. The res...

This paper assesses the market effects of regulatory events associated with the implementation ofa bail-in regime for failing European banks. The bail-in regime was designed to make banksefficiently resolvable in order to abolish Implicit Government Guarantees (IGGs). We use aseemingly-unrelated-regressions framework to estimate the effects on CDS...

This paper examines the role of intermediation for the efficiency of Decentralized Finance (DeFi)markets for startups, with an application to Initial Coin Offerings (ICOs). ICO intermediationis a contentious issue. Existing research fails to explain the trade-off between intermediatedand non-intermediated ICOs. To fill this gap, we advance a search...

How efficient is Decentralized Finance (DeFi)? To answer this question, we study the efficiencyand the role of intermediation in a large DeFi segment, namely, the market for Initial Coin Offer-ings (ICOs). In particular, we advance a search-related theory of DeFi, in which search frictionspartly offset the efficiency gains from reduced transaction...

How efficient is Decentralized Finance (DeFi)? To answer this question, we study the efficiency and the role of intermediation in a large DeFi segment, namely, the market for Initial Coin Offerings (ICOs). In particular, we advance a search-related theory of DeFi, in which search frictions partly offset the efficiency gains from reduced transaction...

New Venture Teams’ (NVTs’) collective emotions impact startup valuations through their intensity and diversity. I identify NVTs’ affective traits with artificial emotional intelligence by tracking 2,520 individuals across 165 NVTs during their Initial Coin Offerings (ICOs). The level of NVTs’ negative affects correlates with lower valuations, while...

Research summary We apply insights from research in social psychology and labor economics to the domain of entrepreneurial finance and investigate how founder chief executive officers’ (founder CEOs’) facial attractiveness influences firm valuation. Leveraging the novel context of initial coin offerings (ICOs), we document a pronounced founder CEO...

We apply insights from research in social psychology and labor economics to the domain of entrepreneurial finance and investigate how founder chief executive officers’ (founder CEOs’) facial attractiveness influences firm valuation. Leveraging the novel context of initial coin offerings (ICOs), we document a pronounced founder CEO beauty premium, w...

A defining feature of initial coin offerings (ICOs) is that entrepreneurs bear the full marginal investment cost but profit only partially from the marginal investment payoff. This design may exacerbate agency conflicts inherent in corporate finance. As a consequence, signals of entrepreneurial quality such as CEO loyalty, which is an established c...

Because time is a key determinant of entrepreneurial decision making, time-to-event models are ubiquitous in entrepreneurship. Widespread econometric misconception, however, may cause complicated biases in existing studies. The reason is spurious duration dependency, a complicated form of endogeneity caused by unobserved heterogeneity, which is par...

The valuation of start-up firms is challenging, yet highly relevant for entrepreneurs and financiers alike. We reverse-engineer fair-value multiples by comparing the firm value at the time of financing with the firm value at the time of exit. Our framework produces reliable valuation multiples from observed venture capital transactions per industry...

This paper examines rent sharing in Private Investments in Public Equity (PIPEs) between newly public firms and private investors. The evidence suggests highly asymmetric rent sharing. Newly public firms earn a negative return of up to -15% in the first post-PIPE year, while investors benefit due to the ability to dictate transaction terms. The res...

This chapter synthesizes the economics, law, and technology of security tokens and Security Token Offerings (STOs). Security tokens are blockchain-based investment contracts that are subject to securities law. Interoperability, fractional ownership, market liquidity, and rapid settlement are among the main reasons why security tokens area primary c...

Sustainable Entrepreneurship (SE) targets profitability and sustainability goals. A major research gap concerns SE’s economic attractiveness for entrepreneurs and investors. The question is ambiguous because sustainability orientation creates costly constraints, while startups cannot fully appropriate their positive externalities. We relate startup...

Recent research finds that whether or not ventures publish video pitches during crowdfunding campaigns affects their funding success. Little is known, however, about how and why video pitches help startups achieve higher valuations. To close this gap, we analyze metrics and the content of video pitches published along blockchain-based crowdfunding...

Active markets for intellectual property (IP) are desirable because they facilitate thereallocation of new inventions to those who can best commercialize them. Therefore,active IP markets provide an incentive for inventors and specialized startups to inventin the first place, which promotes economic growth. However, IP markets are thoughtto be rela...

Sustainable Entrepreneurship (SE) seeks to attain profitability and sustainability goals.A major research gap concerns the economic attractiveness of SE for entrepreneursand investors. The question is ambiguous because sustainability orientation createscostly constraints, while startups cannot fully appropriate their positive externalities.We relat...

We apply insights from research insocial psychology and labor economics to the domain ofentrepreneurial finance and investigate how founder chiefexecutive officers' (founder CEOs') facial attractivenessinfluences firm valuation. Leveraging the novel context ofinitial coin offerings (ICOs), we document a pronouncedfounder CEO beauty premium, with a...

This paper examines the impact of takeover law enforcement on corporate acquisitions. We use the European Takeover Directive as a natural experiment, which harmonizes takeover law across countries, while leaving its enforcement to the discretion of individual countries. We exploit this heterogeneity in enforcement quality across countries in a diff...

Research summary How emotions impact firm valuation is empirically understudied because affective traits are difficult to quantify. However, using artificial emotional intelligence, positive and negative affects can be identified from facial muscle contraction‐relaxation patterns obtained from public CEO photos during Initial Coin Offerings (ICOs),...

Merger control exists to help safeguard effective competition. However, findings from a natural experiment suggest that regulatory merger control reduces the profitability of corporate acquisitions. Uncertainty about merger control decisions reduces the takeover threat from foreign and very large acquirers, and hence facilitates agency-motivated de...

We examine the role of institutional investors in initial coin offerings (ICOs). Taking a financial investor's perspective, we assess the determinants of post-ICO performance via buy-and-hold abnormal returns (BHAR) in a sample of 565 ICO ventures. Conceptually, we argue that institutional investors' superior screening (selection effect) and coachi...

This paper examines the market for initial coin offerings (ICOs). ICOs are smart contracts based on blockchain technology that are designed for entrepreneurs to raise external finance by issuing tokens without an intermediary. Unlike existing mechanisms for early-stage finance, tokens potentially provide investors with rapid opportunities thanks to...

We examine the role of institutional investors in initial coin offerings (ICOs). Taking a financial investor’s perspective, we assess the determinants of post-ICO performance via buy-and-hold abnormal returns in a sample of 565 ICO ventures. Conceptually, we argue that institutional investors’ superior screening (selection effect) and coaching abil...

This paper provides the first evidence of a moral hazard in signaling in an entrepreneurial finance context, by examining token offerings or Initial Coin Offerings (ICOs). Entrepreneurs' ability to signal quality is crucial to succeeding in the competition for growth capital. However, the absence of institutions that verify endogenous signals may i...

New evidence from acquisition decisions suggests that antitakeover provisions (ATPs) may increase firm value when internal corporate governance is sufficiently strong. We document that, in Germany, firms with stronger ATPs, and particularly supermajority provisions, are better acquirers. Managers of high-ATP firms create value in acquisitions by ma...

The role of CEO emotions is empirically understudied due to the difficulty to obtain reliable information on the CEOs’ emotional states. Using a novel artificial emotional intelligence approach, I am able to extract CEO emotions from facial expressions in initial coin offerings (ICOs), i.e. blockchain-based token sales on the internet. The results...

The role of CEO emotions is empirically understudied due to the difficulty to obtain reliable information on the CEOs’ emotional states. Using a novel artificial emotional intelligence approach, I am able to extract CEO emotions from facial expressions in initial coin offerings (ICOs), i.e. blockchain-based token sales on the internet. The results...

Because time is a key determinant of entrepreneurial decision making, time-to-event models areubiquitous in entrepreneurship. Widespread econometric misconception, however, may cause compli-cated biases in existing studies. The reason is spurious duration dependency, a complicated form ofendogeneity caused by unobserved heterogeneity. This article...

This paper assesses the market effects of regulatory events associated with the implementation ofa bail-in regime for failing European banks. The bail-in regime was designed to make banksefficiently resolvable in order to abolish Implicit Government Guarantees (IGGs). We use aseemingly-unrelated-regressions framework to estimate the effects on CDS...

We apply insights from research in social psychology and labor economicsto the domain of entrepreneurial finance and investigate how founder chief executive officers’ (founder CEOs’) facial attractiveness influences firm valuation. Leveraging the novel context ofinitial coin offerings (ICOs), we document a pronounced founder CEO beauty premium, wit...

Because time is a key determinant of entrepreneurial decision making, time-to-event models areubiquitous in entrepreneurship. Widespread econometric misconception, however, may cause compli-cated biases in existing studies. The reason is spurious duration dependency, a complicated form ofendogeneity caused by unobserved heterogeneity. This article...

A defining feature of initial coin offerings (ICOs) is that entrepreneurs bear the full marginal investment cost but profit only partially from the marginal investment payoff. This design may exacerbate agency conflicts inherent in corporate finance. As a consequence, signals of entrepreneurial quality such as CEO loyalty, which is an established c...

Token offerings or initial coin offerings (ICOs) are smart contracts based on blockchain technology designed to raise external finance without an intermediary. The new technology might herald a revolution in entrepreneurial and corporate finance, with soaring market growth rates over the last two years. This paper surveys the market evolution, offe...

This paper examines the impact of takeover law enforcement on corporate acquisitions. We use the European Takeover Directive as a natural experiment, which harmonizes takeover law across countries, while leaving its enforcement to the discretion of individual countries. Following the recommendation in Karpoff and Whittry (2018), we adopt an inducti...

This paper examines the performance of cryptocurrencies issued in initial coin offerings (ICOs) over a three-year period after the initial exchange listing. Average (median) ICO underpricing amounts to 15% (3%), even though 4 out of 10 ICOs destroy value on the first trading day. Liquidity, market capitalization, and high-low price ratios predict r...

We examine to what extent the market for initial coin offerings (ICOs) is driven by investor sentiment. Our results based on a comprehensive set of sentiment and coin price data suggest that the ICO market is driven by crypto-related sentiment, but is almost unrelated to general capital market sentiment. Among the crypto-related sentiment, social m...

Cross-border acquisitions lead to improvements in shareholder rights and more dispersed ownership structures in a large sample of intra-European takeovers. These findings are evidence of corporate governance convergence toward the Anglo-Saxon system through cross-border takeovers. However, we find no support for the corporate governance motive hypo...

Little is known about the role of venture capital (VC) in the financing of blockchain technol-ogy-based firms (BTBFs). We assess BTBF post-ICO performance in terms of growth, utilization, and profits and employ econometric methods to control for the endogeneity inherent inVC financing. Our results suggest that VC financing causes BTBFs to substanti...

Token sales or initial coin offerings (ICOs) are smart contracts on a blockchain designed to raise external finance by issuing tokens or coins. This introduction provides an overview of this novel financing method. Differences between tokens and coins, types of tokens, and various ICO mechanisms are discussed. The author also describes the evolutio...

This paper examines the performance of cryptocurrencies issued in initial coin offerings (ICOs)over a three-year period after the initial exchange listing. Average (median) ICO underpricing amounts to 15% (3%), even though 4 out of 10 ICOs destroy value on the first trading day. Liquidity, market capitalization, and high-low price ratios predict re...