"When Investor Incentives and Consumer Interests Diverge: Private Equity in Higher Education." With Charlie Eaton and Constantine Yannelis.
This paper studies the effect of private equity buyouts in the for-profit postsecondary education sector. Employing novel data on 88 private equity deals and 994 schools with private equity ownership, we find that private equity buyouts lead to higher enrollment and profits, but also to lower education inputs, lower graduation rates, higher tuition, higher per-student debt, lower student loan repayment rates, and lower earnings among graduates. Neither selection ability of the private equity firms nor changes to the student body composition seem to explain our results. An important mechanism for the effects we observe is that private-equity owned schools are better able to capture government aid.
Minsk, Ronald E., Sam P. Ori, and Sabrina Howell. “Plugging Cars into the Grid: Why the Government Should Make a Choice.” Energy Law Journal 30(2), 2009. [Journal website.]
I am an Assistant Professor of Finance at NYU's Stern School of Business, and a Faculty Research Fellow at the National Bureau of Economic Research (NBER). My research and teaching focus on entrepreneurial finance, innovation, fintech, energy, and China.
NON-PEER REVIEWED PUBLICATIONS
Sabrina T. Howell. “Learning from Feedback: Evidence from New Ventures.”
This paper explores how new venture competitions are helpful to entrepreneurs. In a regression discontinuity design using data from 87 competitions in 17 U.S. states, I show that winning is useful. While cash awards matter, winning is independently valuable in ways inconsistent with certification. Competitions instead seem to facilitate learning. I isolate learning by comparing lower and higher ranked non-winners across competitions in which they did and did not observe their standing. There is an economically large effect of negative feedback on venture abandonment. Cross-sectional variation suggests that founders treat their ventures as real options and are Bayesian updaters.
"Listing Delays and Innovation: Evidence from Chinese IPOs.” With Will Cong.
Regulators have suspended IPOs in China on numerous occasions, exposing firms already approved to IPO to indeterminate listing delay. These disruptions curtail firms’ timely access to risk capital and increase uncertainty. After firms ultimately list, suspension-induced delay substantially reduces their innovation activity, measured using patent quantity and quality. These effects begin during the delay and endure for years after listing, while impacts on other firm outcomes are short-lived. The corporate innovation process, like an individual’s accumulation of human capital, has a cumulative dimension. Interrupting it can be detrimental in the long term, highlighting the importance of well-functioning IPO markets.
Howell, Sabrina T. “Joint Ventures and Technology Adoption: A Chinese Industrial Policy that Backfired.” 2018. Research Policy. [Journal website.]
To spur technology transfer, emerging market policymakers often require foreign firms to form joint ventures (JVs) with domestic firms. Through knowledge spillovers, JVs may reduce technology acquisition costs for domestic firms. Yet domestic firm rents from JVs could discourage innovation through a cannibalization effect. Which force dominates is an empirical question. I address it with novel data on China’s auto sector. In response to fuel economy standards requiring firms to upgrade technology or sacrifice quality, firms with JVs reduced quality and price relative to their counterparts. Consistent with cannibalization, firms with JVs drive the negative effect.
Council on Foreign Relations. 2015. "Keeping the Edge: U.S. Innovation." Report.
Smith, Noah. 2015. "Angel Investing, Government Style." Bloomberg. July 9.
Pethokoukis, James. 2015. "Uncle Sam, angel investor?" AEIdeas, July 15.
Davis, Lucas. 2015. "How Should We Design Government Policies to Stimulate Innovation?" Haas Energy Institute. March 23.
Gill, Dee. 2015. "Small, Early Stage R&D Grants to Energy Startups have Large Impact." Chicago Booth Daily Data. February 2.
Howell, Sabrina. 2014. "The Impact of Government Grants in the Clean Energy Sector." Cleantech Group. January 9.
Governments regularly subsidize new ventures to spur innovation. This paper conducts the first large-sample, quasi-experimental evaluation of R&D subsidies. I use data on ranked applicants to the U.S. Department of Energy’s SBIR grant program. An early stage award approximately doubles the probability that a firm receives subsequent venture capital and has large, positive impacts on patenting and revenue. These effects are stronger for more financially constrained firms. Certification, where the award contains information about firm quality, likely does not explain the grant effect. Instead, the grants are useful because they fund technology prototyping.
This paper explores whether and why private and public firms experience different costs of risk management. I exploit a natural experiment in highway procurement, which features diverse firms with common exposure to commodity risk. The Kansas government began to insure highway-paving firms against oil price risk in 2006. With a difference-in-differences design using data from 1998 to 2012, I evaluate the policy’s effect in Kansas relative to Iowa, which never introduced such a policy. A first step shows that the policy reduced procurement costs, increased competition, and reduced bid sensitivity to oil price volatility. This permits examining which firms exhibit more risk pass-through. I find the most pass-through among private firms with high credit risk and low industry diversification, and no pass-through for public firms. Family-owned firms do not have a higher cost of risk. Financial constraints and distress costs appear to best explain the cost of risk management, rather than risk aversion, information, or agency problems.
Sabrina T. Howell
How does corporate innovation investment affect employee departures to entrepreneurship (spawning)? Research and development (R&D) spending may generate growth options for the firm or make it a more interesting workplace, which could decrease spawning. Conversely, R&D spending could increase spawn- ing if employees can appropriate some of the new growth options, or if managing R&D makes them more entrepreneurial. Using U.S. employer-employee matched Census data, we show that R&D investment increases spawning. We identify the causal effect of R&D with changes in federal and state tax incentives. The effect is driven by high-tech parents and by departures to high-growth and venture capital-backed entrepreneurship. Intellectual rather than human capital seems to explain the spawning (i.e., new ideas rather than skills). The effect does not impose observable costs on the parent, leading us to conclude that entrepreneurial spawning is a source of knowledge spillovers from corporate R&D.
Howell, Sabrina, Lee, Henry, and Heal, Adam. 2014. “Leapfrogging or Stalling Out? Electric Vehicles in China.” Discussion Paper, Belfer Center for Science and International Affairs, Harvard Kennedy School.
Howell, Sabrina. 2013. “Pathways for Reducing Oil Consumption in the U.S.” Carbon War Room & Fuel Freedom Foundation Research Report.
Howell, Sabrina. 2009. “Jia You! (Add Oil!): Chinese Energy Security Strategy.” In Luft, Gal and Anne Korin, eds. Energy Security Challenges for the 21 Century. California: Praeger Publishing.
Smith, Anne E. and Sabrina Howell. 2009. “An Assessment of the Robustness of Visual Air Quality Preference Study Results.” Environmental Protection Agency Clean Air Scientific Advisory Committee (EPA CASAC) Particulate Matter Review, Public Comments, March 30.