This dissertation comprises three independent essays in empirical corporate finance, with a focus on labor and finance and entrepreneurial finance. In the first chapter, I study the implication of within-firm labor heterogeneity for firm performance through the lens of employee political ideology. Using individual campaign donation information to capture political ideology, I find that political ideology conflicts, both those within employees and those between CEOs and employees, negatively affect firms’ future operating performance. To establish causality, I use an instrumental variable approach which relies on the exogenous variation in political ideology caused by local television station ownership changes. The second chapter studies the large decline in U.S. IPOs since 2000. This essay first finds that the dramatic reduction in U.S. IPOs is not due to a weaker economy. Second, this essay finds evidence strongly supports the hypotheses that the decline in U.S. IPOs is due to the public firms’ greater sensitivity to product market competition and the greater supply of private equity financing in the post-2000 period. Finally, this essay finds mixed evidence regarding the explanations based on the smaller net financial benefits of being standalone public firms or the increased need for confidentiality after 2000. The third chapter examines an emerging phenomenon that talented employees leave successful entrepreneurial firms to join less mature ones. This essay finds that these “entrepreneurial diffusers”, by potentially passing on entrepreneurial knowledge and institutional wisdom, can enhance their new colleagues’ innovation productivity and help their new employers successfully exit. This essay further finds that these diffusers are motivated by an entrepreneurial culture that prizes risk-taking rather than by the prospect of monetary gain. Finally, the departure of entrepreneurial diffusers contributes to the well-documented long-run IPO underperformance in accounting and stock returns.
