Reference no: EM132318414

Question 1: Survey Method

Part 1: Please refer to the following paper: Bernstein, S., Giroud, X., & Townsend, R. R. (2016). The impact of venture capital monitoring. The Journal of Finance, 71(4), 1591-1622.

With reference to Bernstein, Giroud & Townsend (2016), please answer the following questions.

a) What's authors' purpose of conducting the survey on venture capitalists?

b) What is social desirability bias?

c) Why authors care about social desirability bias in this paper?

d) How do authors address the social desirability bias in their survey?

Part 2: Short Questions

a) What's the purpose of selecting the survey targets randomly?

b) Discuss what's the interviewer bias? What do you think is the effective way to judge whether there exists an interviewer bias or not?

Question 2: Experiments and Regression Discontinuity

Part 1: Please refer to the following paper: Bernstein, S., Korteweg, A., & Laws, K. (2017). Attracting early-stage investors: Evidence from a randomized field experiment. The Journal of Finance, 72(2), 509-538.

With reference to Bernstein et al. (2017), please answer the following questions.

a) In 150 words or less, explain what have motivated these researchers to choose a field experimental research design.

b) Please answer the following questions

What is the main aim of the experiment by Bernstein et al. (2017)?

Is internal validity a concern of this experiment and why?

What's potential external validity concern and how does authors check it?

Part 2: Please refer to the following paper: Gao, L., He, J., & Wu, J. (2018). Standing out from the crowd via corporate social responsibility: Evidence from non-fundamental-driven price pressure. Available at SSRN 2830742.

With reference to Gao et al. (2018), please answer the following questions.

a) In 50 words or less, explain what's the research question of this paper.

b) Focusing on the second natural experiment (SHO), which firms belong to the treatment group and which firms belong to the control group.

c) Discuss whether the second experiment satisfies two conditions of natural experiment: 1) the selection of treatment is random, and 2) parallel trend.

d) In Column (1) of Table 6, what's the most important variable of authors' interest? What does the coefficient of this variable imply?

Part 3: Please refer to the following paper: Chava, S., & Roberts, M. R. (2008). How does financing impact investment? The role of debt covenants. The journal of finance, 63(5), 2085-2121.

With reference to Chava and Roberts (2018), please answer the following questions.

a) What's covenant? What's the consequence of firm of violating the covenant?

b) In their study, which firms belong to treatment group (equal to 1), and which firms belong to control group (equal to 0)?

c) Which RD methodology does this paper apply? Sharpe RD or Fuzzy RD?

Question 3: Regression and Endogeneity

Part 1: Please refer to the following paper: Guo, H., Mortal, S., Savickas, R., & Wood, R. (2017). Market illiquidity and conditional equity premium. Financial Management, 46(3), 743-766.

With reference to Guo et al., (2017), please answer the following questions.

a) Please explain the research question of the paper in no more than 50 words.

b) In Table 2 in Page 753, in Row, it shows that LRES_LD has no explanatory power in Row 1, but it turns out to be positive and significant in Row 2. Pls explain why that's the case with your knowledge of endogeneity.

Part 2: Please refer to the following paper: Bennedsen, M., Nielsen, K. M., Pérez-González, F., & Wolfenzon, D. (2007). Inside the family firm: The role of families in succession decisions and performance. The Quarterly Journal of Economics, 122(2), 647-691.

With reference to Bennedsen et al. (2007), please answer the following questions.

a) What's the endogeneity issue as identified by the authors? Will this issue make the OLS coefficient of family succession to be upward biased or downward biased?

b) Discuss whether the two conditions of the IV (relevance and exclusion conditions) has been satisfied by the paper.

c) By comparing the coefficients of OLS and 2SLS regression, please discuss whether the IV works to solve the endogeneity issue?

Part 3: Short questions

a) When reporting the regression results, why do we care more about adjusted R² than R²?

b) You are running a regression of: Y = α + βX + ε

You estimate β to be 1.5. Based on finance theory, you notice that X has a measurement error. In this case, what's the best you can say about the true β?

Question 4: Event Study

Short Questions:

a) When we are studying the stock price reactions to earnings announcement, why do we need to know analysts' earnings forecast consensus?

b) Firm A applied a patent to the government. Investors initially predict that the success rate was 60%. It turns out that the patent is announced to be successful today. Firm A's abnormal return today is 3%. What's the total value (return) has been created by this patent?

c) In the event study, why do we often leave a gap between the "estimation window" and the "event window"?