Working Papers


Persuading Investors: A Video-Based Study

(with Song Ma), 2020

Abstract: Persuasive communication is a function of not only content but also delivery, e.g., facial expressions, tone of voices and diction. This paper examines the persuasiveness of delivery in start-up pitches. Using machine learning (ML) algorithms to process full pitch videos, we quantify persuasion in visual, vocal, and verbal dimensions. Positive (i.e., passionate, warm) pitches increase funding probability. Yet conditional on funding, high-positivity startups underperform. Women are more heavily judged on pitch delivery when evaluating single-gender teams, but are neglected when co-pitching with men in mixed-gender teams. Using an experiment, we show that persuasion delivery works mainly through leading investors form inaccurate beliefs.



Exploited by Complexity

Abstract: Due to their complex features, structured financial products harm the average investor. But, can some investors benefit from this complexity? Using account-level transaction data of retail structured funds, we show that the rich (sophisticated) benefit from complexity at the expense of the poor (naive). The poor-to-rich wealth transfer that results from trading structured funds is an order of magnitude greater than the wealth transfer from trading simple, non-structured funds. In an event study, we further confirm that the wealth transfer can be partially attributed to investors' differing responses to complexity. In particular, when a market crash triggers funds into a restructuring process and their prices are expected to shrink by half on a given day, the poor and naive subset of investors fail to respond effectively.


Work in Progress


Self-Selected or Designated: Which SIC Code is True?


Inference with Cluster Imbalance: The Case of State Corporate Laws