Professor Shai B. Bernstein, PhD

Current Position

since 7/23

Research Fellow Department of Laws, Regulations and Factor Markets

Halle Institute for Economic Research (IWH) – Member of the Leibniz Association

since 2020

Associate Professor

Harvard Business School

Research Interests

  • entrepreneurial finance
  • innovation

Shai B. Bernstein joined the institute as a Research Fellow in May 2022. His research focuses on financial issues related to start-ups and high growth firms, and the interaction of these issues with innovation and entrepreneurial activity.

Shai B. Bernstein is the Marvin Bower Associate Professor in the Entrepreneurial Management Unit at Harvard Business School and a Faculty Research Fellow at the National Bureau of Economic Research (NBER).

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Professor Shai B. Bernstein, PhD
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Who Creates New Firms When Local Opportunities Arise?

Shai B. Bernstein Emanuele Colonnelli Davide Malacrino Timothy McQuade

in: Journal of Financial Economics, No. 1, 2022


We examine the characteristics of the individuals who become entrepreneurs when local opportunities arise. We identify local demand shocks by linking fluctuations in global commodity prices to municipality-level agricultural endowments in Brazil. We find that the firm creation response is mostly driven by young and skilled individuals. The characteristics of these responsive entrepreneurs are significantly different from those of average entrepreneurs in the economy. By structurally estimating a novel two-sector model of a local economy, we highlight how the demographic composition of the local population can significantly affect the entrepreneurial responsiveness of the economy.

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Do Household Wealth Shocks Affect Productivity? Evidence From Innovative Workers During the Great Recession

Shai B. Bernstein Richard R. Townsend Timothy McQuade

in: Journal of Finance, No. 1, 2021


We investigate how the deterioration of household balance sheets affects worker productivity, and in turn economic downturns. Specifically, we compare the output of innovative workers who experienced differential declines in housing wealth during the financial crisis but were employed at the same firm and lived in the same metropolitan area. We find that, following a negative wealth shock, innovative workers become less productive and generate lower economic value for their firms. The reduction in innovative output is not driven by workers switching to less innovative firms or positions. These effects are more pronounced among workers at greater risk of financial distress.

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Private Equity and Portfolio Companies: Lessons From the Global Financial Crisis

Shai B. Bernstein Josh Lerner Filippo Mezzanotti

in: Journal of Applied Corporate Finance, No. 3, 2020


Critics of private equity have warned that the high leverage often used in PE-backed companies could contribute to the fragility of the financial system during economic crises. The proliferation of poorly structured transactions during booms could increase the vulnerability of the economy to downturns. The alternative hypothesis is that PE, with its operating capabilities, expertise in financial restructuring, and massive capital raised but not invested ("dry powder"), could increase the resilience of PE-backed companies. In their study of PE-backed buyouts in the U.K. - which requires and thereby makes accessible more information about private companies than, say, in the U.S. - the authors report finding that, during the 2008 global financial crisis, PE-backed companies decreased their overall investments significantly less than comparable, non-PE firms. Moreover, such PE-backed firms also experienced greater equity and debt inflows, higher asset growth, and increased market share. These effects were especially notable among smaller, riskier PE-backed firms with less access to capital, and also for those firms backed by PE firms with more dry powder at the crisis onset. In a survey of the partners and staff of some 750 PE firms, the authors also present compelling evidence that PEs firms play active financial and operating roles in preserving or restoring the profitability and value of their portfolio companies.

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