Conference Agenda

Protective regulation aims to safeguard consumers yet may impose frictions that inhibit entrepreneurial activity. I study this tension in the context of U.S. state cryptocurrency licensing laws using novel data linking regulatory announcements, startup formation, investment, hiring, and patenting. Markets respond negatively to protective legislation, but regulated states subsequently experience more entrepreneurial activity. Difference-in-differences estimates exploiting staggered adoption show that licensing requirements increase startup entry, capital raised, patent applications, and hiring -- especially in engineering and compliance roles. To account for this divergence between market reactions and real outcomes, I develop a model in which regulatory intensity generates asymmetric responses by firm quality and size. Consistent with the model, the evidence indicates that protective regulation creates a certification channel that disproportionately benefits high-quality entrants while discouraging lower-quality competitors.

We provide the first large-sample evidence that decentralized voting is widespread within mutual fund families. Contrary to the view that families vote as unified blocs, we find that at least 40% of families exhibit evidence of decentralized voting, starting as early as 2006. We measure decentralization using voting disagreement within the family, which is low unconditionally due to the high volume of routine proposals, but rises substantially for controversial proposals, environmental and social issues, and when proxy advisors recommend voting “against.” Decentralized voting is more prevalent in families with more active funds and greater stewardship resources, and funds within a family vote more similarly when they share management structures and characteristics. Decentralization has consequences for governance and fund investors. First, it weakens the monitoring effectiveness of institutional investors—a result we corroborate using Vanguard's 2019 adoption of decentralized voting as a quasi-natural experiment. Second, funds that deviate from their family’s voting stance charge higher fees without delivering higher returns for clients. Yet, funds that deviate attract higher inflows.