Empirical analysis of the organization of venture capital firms
Abstract/Contents
- Abstract
- The dissertation consists of four chapters. Chapter 1 presents a model in which the internal organization and size of a professional partnership reflect contracting problems associated with collaboration between junior professionals and senior professionals. The model offers an economic rationale for the formation of multiple partners firms and demonstrates that when arrival of clients is uncertain they allow for better utilization of the juniors. Additionally, the analysis proposes a new approach to defining firm boundary which applies the incentive-system theory of the firm to the institutional context of professional partnerships. Chapter 2 studies the economic factors determining the size and composition of Venture Capital (VC) firms. I construct a panel data set documenting California VC firms' composition and investments and derive statistical relationships between firm size, its partners' experience, and industry trends. To interpret these empirical findings, the chapter considers several theories of partnership and firm size that vary in their economic rationale for forming firms and the factors determining equilibrium firm size. I discuss under what assumptions these theories can explain the empirical regularities and highlight methodological differences between these approaches. Chapter 3 quantitatively studies the surplus gains obtained by senior and junior partners who group together in a profit sharing partnership. The analysis addresses two empirical challenges: 1) the inability to observe and measure the surplus gains; and 2) the dependency of the gains on unobserved characteristics of the partners. I develop a model inferring the gains from the optimality of firms' decisions to recruit junior partners. The model exploits turnover and mobility of partners between firms to capture unobserved heterogeneity at the partner level. I estimate the model using a novel panel data set documenting California VC firms' composition, investments, and investment outcomes. Chapter 4 empirically studies whether mandatory unbundling delayed the deployment of DSL service by BellSouth by exploiting a law change in Kentucky and variation in access prices across markets. I find that deregulation in Kentucky triggered deployment, but I find no evidence that access prices affected deployment pace. An upper bound on the welfare loss due to late deployment in rural markets is $21 million. The findings are consistent with a positive effect of deregulation on the profitability of upgrades, but can also result from a strategic delay which is part of the bargaining between the firm and the regulator.
Description
| Type of resource | text |
|---|---|
| Form | electronic; electronic resource; remote |
| Extent | 1 online resource. |
| Publication date | 2011 |
| Issuance | monographic |
| Language | English |
Creators/Contributors
| Associated with | Alter, Amitay |
|---|---|
| Associated with | Stanford University, Department of Economics |
| Primary advisor | Einav, Liran |
| Thesis advisor | Einav, Liran |
| Thesis advisor | Bresnahan, Timothy F |
| Thesis advisor | Leslie, Phillip, 1970- |
| Advisor | Bresnahan, Timothy F |
| Advisor | Leslie, Phillip, 1970- |
Subjects
| Genre | Theses |
|---|
Bibliographic information
| Statement of responsibility | Amitay Alter. |
|---|---|
| Note | Submitted to the Department of Economics. |
| Thesis | Ph.D. Stanford University 2011 |
| Location | electronic resource |
Access conditions
- Copyright
- © 2011 by Amitay Alter
- License
- This work is licensed under a Creative Commons Attribution Non Commercial 3.0 Unported license (CC BY-NC).
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