Discussion

Overview

Class Preparation Materials:

• Required Readings:
  • Bernstein, S. (2015). Does going public affect innovation? The Journal of Finance, 70(4), 1365-1403.
  • Chok, J., & Qian, J. (2013). Do executives' backgrounds matter to IPO investors? Evidence from the life science industry. PLoS ONE, 8(5), e60911.
  • Kerr, W. R., & Nanda, R. (2011). Financing constraints and entrepreneurship. In Z. J. Acs & D. B. Audretsch (Eds.), Handbook of research on innovation and entrepreneurship (pp. 331-353). Edward Elgar Publishing.
  • Kerr, W. R., & Nanda, R. (2015). Financing innovation. Annual Review of Financial Economics, 7(1), 445-462.
  • Kortum, S., & Lerner, J. (2000). Assessing the contribution of venture capital to innovation. The RAND Journal of Economics, 31(4), 674-692.
  • Maksimovic, V., & Pichler, P. (2001). Technological innovation and initial public offerings. The Review of Financial Studies, 14(2), 459-494.

Capital Markets and Innovation Discussion

For this week’s discussion, answer the following questions in at least 100 words each:

1. What do investors buy when they invest in start-up firms with no substantial assets in place?
2. Does going public affect the innovation output of firms? If so, through what mechanisms does going public influence innovation?
3. What are the key financing mechanisms used to support innovation? How do these financing mechanisms impact the nature and extent of innovation?
4. What is the contribution of venture capital to innovation? How does venture capital financing influence the rate and direction of technological change?
5. How do financing constraints affect entrepreneurial activity and innovation? What are the consequences of these constraints for the development of new firms and technologies?