Essays on Entrepreneurial Finance

This dissertation consists of an introduction and three original essays. The first essay provides causal evidence that managers extrapolate when making real investment decisions. Managers of small, weather-sensitive businesses increase investment in response to temporary and weather-induced increases to their cash flows. This is consistent with the idea that their expectations of long term future cash flows have improved as a result of a temporary shock to current cash flows. Extrapolation has negative outcomes for these firms, with more firms shutting down in subsequent years. The second essay (joint with Deniz Okat) attempts to provide causal evidence that high levels of corporate cash holdings lead to wasteful investments (i.e. cash holdings create manager-shareholder agency problems). Using the exercise of the greenshoe option during the initial public offering (IPO) process as an exogenous cash infusion to firms, we show that firms receiving cash "randomly" make more acquisitions and that these acquisitions have lower returns.  The third essay (joint with Elina Koivisto) examines the role of entrepreneur appearance in early-stage investment decisions. We ask participants on Amazon's MTurk service to rate a series of real investment pitches from the Slush 100 pitching competition on three dimensions of appearance: The appearance of competence, trustworthiness and attractiveness. We find that entrepreneurs whose appearance is rated "more competent" are significantly more likely to attract angel investment and venture capital with weaker but still positive effects for the appearance of trustworthiness. 

Trust in Traditional Finance and Consumer Fintech Adoption

We study the role of trust in traditional finance in the consumer adoption of various fintech products, including cryptocurrencies, peer-to-peer lending, other crowdfunding, roboadvisors, and alternative payment solutions. Using an online lab experiment, an experiment on an investment website, and a representative survey of Dutch households, we find no consistent evidence that trust in banks affects fintech adoption in any of the product categories, although we find weak evidence suggesting that trust in banks positively affects interest in alternative payment apps. Our results do not support the narrative that trust in traditional finance is a major driver of fintech adoption

A Scandcleft randomised trials of primary surgery for unilateral cleft lip and palate:1. Planning and management

<p><b>Background and aims:</b> Longstanding uncertainty surrounds the selection of surgical protocols for the closure of unilateral cleft lip and palate, and randomised trials have only rarely been performed. This paper is an introduction to three randomised trials of primary surgery for children born with complete unilateral cleft lip and palate (UCLP). It presents the protocol developed for the trials in CONSORT format, and describes the management structure that was developed to achieve the long-term engagement and commitment required to complete the project.</p> <p><b>Method:</b> Ten established national or regional cleft centres participated. Lip and soft palate closure at 3–4 months, and hard palate closure at 12 months served as a common method in each trial. Trial 1 compared this with hard palate closure at 36 months. Trial 2 compared it with lip closure at 3–4 months and hard and soft palate closure at 12 months. Trial 3 compared it with lip and hard palate closure at 3–4 months and soft palate closure at 12 months. The primary outcomes were speech and dentofacial development, with a series of perioperative and longer-term secondary outcomes.</p> <p><b>Results:</b> Recruitment of 448 infants took place over a 9-year period, with 99.8% subsequent retention at 5 years.</p> <p><b>Conclusion:</b> The series of reports that follow this introductory paper include comparisons at age 5 of surgical outcomes, speech outcomes, measures of dentofacial development and appearance, and parental satisfaction. The outcomes recorded and the numbers analysed for each outcome and time point are described in the series.</p> <p><b>Trial registration:</b> ISRCTN29932826.</p