Working Paper
Calder-Wang S, Gompers P. And the Children Shall Lead: Gender Diversity and Performance in Venture Capital. NBER Working Paper [Internet]. Working Paper. Publisher's VersionAbstract

Featured in The Economist, New York Times, Fortune, Washington Post and HuffPost.

With an overall lack of gender and ethnic diversity in the innovation sector documented in Gompers and Wang (2017), we ask the natural next question: Does increased diversity lead to better firm performances? In this paper, we attempt to answer this question using a unique dataset of the gender of venture capital partners’ children. First, we find strong evidence that parenting more daughters leads to an increased propensity to hire female partners by venture capital firms. Second, using an instrumental variable set-up, we also show that improved gender diversity, induced by parenting more daughters, improves deal and fund performances. These effects concentrate overwhelmingly on the daughters of senior partners than junior partners. Taken together, our findings have profound implications on how the capital markets could function better with improved diversity.

Calder-Wang S, Gompers P, Huang K. Homophily in Entrepreneurial Team Formation. NBER Working Paper No. w23459 [Internet]. Working Paper. Publisher's VersionAbstract
We study the role of homophily in group formation. Using a unique dataset of MBA students, we observe homophily in ethnicity and gender increases the probability of forming teams by 25%. Homophily in education and past working experience increases the probability of forming teams by 17% and 11% respectively. Homophily in education and working experience is stronger among males than females. Further, we examine the causal impact of homophily on team performance. Homophily in ethnicity increases team performance by lifting teams in bottom quantiles to median performance quantiles, but it does not increase the chance of being top performers. Our findings have implications for understanding the lack of diversity in entrepreneurship and venture capital industry.
Calder-Wang S, Gompers P. Diversity in Innovation: A Survey. NBER Working Paper [Internet]. Working Paper. Publisher's VersionAbstract

In this paper we document the patterns of labor market participation by women and ethnic minorities in venture capital firms and as founders of venture capital-backed startups. We show that from 1990-2016 women have been less than 10% of the entrepreneurial and venture capital labor pool, Hispanics have been around 2%, and African Americans have been less than 1%. This is despite the fact that all three groups have much higher representation in education programs that lead to careers in these sectors as well as having higher representation in other highly-compensated professions. Asians, on the other hand, have much higher representation in the venture capital and entrepreneurial sector than their overall percentages in the labor force. We explore potential supply side explanations including both education attainment as well as relevant prior job experience. We also explore the correlation between diversity and state-level variations. Finally, we discuss how these patterns are consistent with homophily-based hiring and homophily-induced information flows about career choices. We end the paper by discussing areas for future research.

Featured in Fortune.

Calder-Wang S. The Value of Information: Why You Should Add the Second Order Conditions. Working Paper.Abstract

When conducting estimation based on agent optimization, we show that one can improve the performance of the estimator when information such as the second order condition is appropriately incorporated as moment inequality restrictions, especially when there are weak instruments. We run a simulation study to demonstrate the effectiveness of this approach in both continuous and discrete choice problems, and illustrate to empirical researchers how to include the additional moment inequalities in practice.

Hamel A, Wang SQ. A Set-Valued Approach to Utility Maximization under Transaction Cost. Decision in Economics and Finance [Internet]. 2017;(1-19). Publisher's VersionAbstract

A set optimization approach to multi-utility maximization is presented, and duality results are obtained for discrete market models with proportional transaction costs. The novel approach allows us to obtain results for non-complete preferences, where the formulas derived closely resemble but generalize the scalar case.

Wang SQ. The Utility Maximization Problem in Markets with Transaction Costs: A Set Valued Approach. Department of Mathematics. 2011.Abstract

The problem of utility maximization for a scalar utility function is well-known and assumes specific forms for its solution. When there are market transaction costs, it is no longer realistic to assume total liquidation into one numeraire asset, and therefore, a set-valued approach is preferred. In this paper, an original formulation of the set-valued utility maximization in a finite probability space is presented. In particular, the formulation consists of the procedure of dualizing the constraint, the notion of Lagrange duality, and a characterization of the dual value function.