Abstract: I investigate the impact of monitoring on investors, specifically examining how venture capitalists' (VCs') on-site involvement with portfolio companies affects their subsequent deals. By analyzing 85 billion cell phone signals collected around VC and startup office buildings from 2018 to 2023, I develop a novel measure of VCs' monitoring activities. I show that increased VC monitoring leads to better deals in the future. Specifically, when VCs double the frequency of their monthly meetings with startups, then one year later, they are twice as likely to invest in startups that eventually become unicorns. This improvement is likely due to enhanced VC reputation, evidenced by VCs with more frequent visits subsequently attracting more experienced CEOs for their future investments. Furthermore, this paper leverages the unique dataset to document eight stylized facts about VC monitoring: (1) VCs monitor underperforming portfolio companies more frequently; (2) VC monitoring frequency correlates with proximity; (3) early-stage investments receive more monitoring; (4) accelerators and incubators monitor more frequently than traditional VCs; (5) PEs, CVCs, and VCs show similar monitoring intensity; (6) deals with more co-investors tend to have more total meetings, but fewer meetings per investor; (7) VCs with more employees hold more total, but fewer per-deal, meetings; and (8) larger portfolio companies attract more monitoring.
Alexander Yuskavage, U.S. Department of the Treasury
Abstract: We develop a framework to measure remote work at the firm level using novel data of the daily internet activity for over 300,000 firms in the United States from 2019 to 2021. We observe whether employee internet activity originates from remote work locations or in-office and measure of the fraction remote work activity for each firm over time. Validating this classification, we document a 30\% increase in remote IP traffic in March 2020 at the onset of the crisis and a negative covariance of -0.756 between the share of remote IP traffic in a county and mobile phone data on workplace visits. Next, we study the impact of remote work on firm performance using confidential tax filings data. Instrumenting remote work decisions with firm-level pre-pandemic commuting distance, we document an economically significant rise in output following a shift to remote work. Micro-evidence from employee reading patterns are consistent with a rise in overall productive activity. In the cross-section, we find that such benefits accrue primarily to firms with greater monitoring ability, lower monitoring costs, stronger worker incentives, tradeable sector, and urban firms. We also find evidence that remote work policies provide advantages to firms in the labor market as workers flow to firms which work remotely.
Discussant: Denis Sosyura, Arizona State University
Abstract: Big data allows active asset managers to find new trading signals but doing so requires new skills. Thus, it can reduce the ability of asset managers lacking these skills to produce superior returns. Consistent with this hypothesis, we find that the release of satellite imagery data tracking firms’ parking lots reduces active mutual funds’ stock picking abilities in stocks covered by this data. This decline is stronger for funds that are more likely to rely on traditional sources of expertise (e.g., specialized industry knowledge) to generate their signals, leading them to divest from covered stocks. These results suggest that big data has the potential to displace high-skill workers in finance.
Discussant: Jillian Grennan, University of California-Berkeley
