Finance Seminar（2019-01)

Topic: Impact of Venture Capital Flows on Incumbent Firms: Evidence from 70 Million Workers

Speaker: Linghang Zeng, Georgia Institute of Technology

Time: Wednesday, 9 January, 10:00-11:30

Location: Room 217, Guanghua Building 2

Abstract:

Using an anonymized employer-employee matched payroll dataset of 70 million workers, I examine the effect of venture capital (VC) investment flows on large local incumbent firms. I find that a VC investment of $1,000 per capita nearly doubles the wage growth for high-skilled workers in that region, while there is no effect for low-skilled workers. This wage effect is particularly strong in regions with inelastic short-term labor supply, and regions with lower enforceability of non-compete agreements. To mitigate concerns about time-varying shocks at the industry-region level, I exploit within-industry-state and within-firm variation, conduct occupation-level analysis, and utilize variation in VC funding. Further, I find that incumbent firms experience lower growth of high-skilled employment and a higher departure rate among patent inventors. Incumbent firms also cut R&D and generate lower-quality innovation. Overall, my results highlight that VC investment inflows, through competition for talent, can have distributional effects on workers and adverse consequences for some local incumbent firms.

Introduction:

Linghang Zeng is a Ph.D. candidate in Finance at the Scheller College of Business, Georgia Tech. Before that, Linghang received a Master's degree in Mathematical Finance from the University of Alberta and a Bachelor’s degree in Industrial Engineering from Nanjing University.

Linghang's research interests include labor and finance, household finance, financial intermediation, and empirical asset pricing. His papers have been presented at numerous conferences such as NBER Summer Institute, SFS Cavalcade, and EFA. His research has won the Best Paper Award on Corporate Finance/Responsible Finance at the Northern Finance Association Annual Meeting, Third Place in the Chicago Quantitative Alliance (CQA) Annual Academic Competition. He teaches Finance and Investments.

//sites.google.com/view/linghang-zeng

Your participation is warmly welcomed!