Current Glucksman Fellowship Program Student Research Reports, AY 2017-18The Glucksman Institute for Research in Securities Markets awards fellowships each year to outstanding second year Stern MBA students to work on independent research projects under a faculty member's supervision. Three research projects completed by the Glucksman Fellows of 2017-2018 are included in a special Glucksman Institute Working Paper. These papers focus on important topics in empirical financial economics.
Tarun Sinha, under the supervision of Alexander Ljungqvist focuses on the impact of corporate venture capital (CVC) investments on the corporation’s stock price and on the investee’s exit probability. Dylan Kellachan under the supervision of Lawrence White examines the behavior of Amazon and asks whether U.S. antitrust laws need to be revised to reflect the 21st century economy. Andrew Kvam under the supervision of David Yermack, explores the evolution of enhanced collective action clauses in sovereign debt offerings and examines the impact on borrowing costs since their introduction. These papers, reflecting the research effort of three outstanding Stern MBA students, are summarized in more detail below. You may download any of these research papers, as well as those of previous years, by clicking here.
William L. Silber, Director
Corporate Venture Capital: Stock Market Reactions and Impact on Investee Exit
This study focuses on the impact of corporate venture capital (CVC) investments on the corporation’s stock price and on the investee’s exit probability. Event study results show no statistically significant stock market reaction to news of a CVC investment or an investee’s exit, except when reactions to investments with or without strategic alignment are compared. In these cases, investments in startups in a different industry to the corporate parent elicit a negative abnormal return, and in startups in the same industry a positive abnormal return. While the stock market reactions studied are immediate, the study also aims to identify longer term effects of CVC investments on the investee’s exit probability. Survival models built for this purpose identify investment characteristics including experience, funding size, co-investment, strategic alignment, and market conditions that positively and negatively affect exit probability. Notably, strategic alignment is found to lower exit probability. The paper discusses possible reasons for these findings, drawing on prior work and anecdotal evidence from CVC practitioners for support.
Should Amazon Be Broken Up? An Analysis of Valuations and U.S. Antitrust Laws in the 21st Century Economy
This paper examines the validity of the claim in the media that the significant rise in Amazon’s market capitalization and the size and scope of the e-commerce giant should make Amazon the focus of more antitrust scrutiny. Regulators have also questioned whether U.S. antitrust laws need to be revised to reflect the 21st century economy. This paper discusses this topic in the context of other platform-based tech giants such as Facebook and Google and presents event studies that show the stock market’s reactions to news of Amazon’s acquisitions. The results generally support some popular perceptions of Amazon’s activities but do not resolve the question of whether the high concentrations of power in firms such as Amazon are anticompetitive.
Review of New Enhanced Collective Action Clauses in Sovereign Debt Terms and the Resulting Impact on Borrowing Costs
This paper examines the emergence of new enhanced collective action clauses in sovereign debt terms and studies the resulting impact on borrowing costs as measured by spreads over relevant benchmark securities at issuance. When comparing sovereign debt issued before and after the development and widespread use of the new clauses, the paper finds mixed results with indications that borrowing costs may have increased for higher rated issuers electing to utilize the new terms. However, given the relatively short window of analysis and resulting limited sample size, additional study is warranted before a definitive conclusion can be reached on the effect of the new clauses.