Investors and Investees Behaviours

Financial innovation has opened financial markets to unprecedented numbers of retail investors with no or limited knowledge and experience of actively participating in financial markets.  While improving financial inclusion is desirable, it may negatively impact a country’s economic and financial development and the robustness of investment decisions in would-be entrepreneurs.  Therefore, understanding factors that affect unsophisticated investors’ behaviour is essential.  Concurrently, improving our understanding of financial illiteracy and potential methods of reducing it is vital.  This could not be achieved without studying the characteristics and behaviour of institutional investors, who are a natural comparator base for retail investors.  Relatedly, private equity markets are now under close scrutiny after a spree of investments to create fast-growth but no-profit unicorns.  They are challenged by public equity markets looking for sustainable businesses (the collapse of WeWork is a notorious example of the failure of the private equity unicorn model).  The market for entrepreneurial finance is perhaps more competitive than ever, but it raises questions over whether new types of agency problems have entered into entrepreneurial financing decisions.  The growing choice and innovation around entrepreneurial finance create a new challenge for entrepreneurs: choosing the right investor and investment method matters greatly to the resources and capabilities entrepreneurs can access in the short-to-medium term.

Examples of our engagement and contribution to practice and policy/regulatory debates

Ania Zalewska’s pension research has been covered by numerous media outlets (including FT Pension Expert, Science Daily, Actuarial Post, PensionsAge, Professional Pensions, EurekAlert!).  She has also written several op-eds and similar articles:

• Pensions: why automatic enrolment may not suit the self-employed  

• Pensions for self-employed need a rethink  

• Huge pension fund deficits are a global crisis in waiting (covered by many outlets, incl. The Hill, EconoTimes, MoneyWeb)

Mat Hughes’ research into equity crowdfunding sheds light on how lead investors can accrue sufficient financial investment from crowds to fund entrepreneurial investments:

• The Effect of Lead Investors’ Trustworthiness on Funding Performance: The Moderating Effect of Investment-specific Human Capital 

• The effect of lead investor’s human capital on funding performance: the moderating role of investment ambition

• Equity crowdfunding syndicates and fundraising performance: The effect of human capital and lead investor reputation