Essays in empirical corporate finance

On Thursday 27 February 2025 Johan Ludvig Schmidberger Karlsen will hold a trial lecture on a prescribed topic and defend his thesis for the PhD degree at NHH.

Johan Karlsen´s dissertation consists of three essays in empirical corporate finance.

The first essay, co-authored with Katja Kisseleva, Aksel Mjøs, and David T. Robinson, studies the performance of angel investors—a segment of the capital market about which relatively little is known. The study finds that while most angel investments perform poorly, the mean return is twice the invested capital, largely due to extreme skewness in the return distribution. Examining the determinants of performance, we highlight the importance of professional networks: top-performing angels tend to have broader networks of startup-relevant connections, suggesting they have access to superior deal flow. The study also underscores the significance of unobservable investor characteristics in explaining variation in angel performance.

The second essay, co-authored with Brian K. Baik and Katja Kisseleva, focuses on informal startup investors—individual investors who are family members of the entrepreneur. These investors are associated with a set of interesting theoretical predictions for which empirical evidence remains scarce. For example, informal investors may require lower returns due to altruistic investment motives. Additionally, because informal financing can introduce potential shadow costs in the event of startup failure, it may discourage entrepreneurs from taking risks.

The study provides empirical evidence supporting these predictions.

The third essay examines how customer base concentration affects supplier firms’ operating performance in competitive markets, using industry-level tariff cuts as exogenous shocks to product market competition. These shocks increase the risk of customers switching to foreign suppliers and enhance the bargaining power of major customers. Moreover, when major customers reduce their demand, the relationship-specific investments commonly associated with major customer relationships make it costly for suppliers to redeploy their assets. Consistent with this, the results suggest that customer concentration leads to lower operating performance and higher costs associated with acquiring new customers following tariff cuts.