Professor Dr William McShane

Professor Dr William McShane
Current Position

since 8/23

Research Professor

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

since 8/23

Assistant Professor

The American University of Paris

Research Interests

  • financial crises
  • financial stability
  • real effects of financial intermediation

William McShane joined the institute as a Research Professor in August 2023. His research focuses on financial stability and the effects of financial intermediation on the real economy.

William McShane holds the position of Assistant Professor at The American University of Paris. Prior to that, he was a doctoral student at IWH and research assistant to Reint E. Gropp, the president of IWH. He received his bachelor's degree in psychology from Beloit College in the United States and earned a master's degree in international economics and finance from Otto von Guericke University Magdeburg, where he also obtained his doctorate.

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Professor Dr William McShane
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Working Papers


R&D Tax Credits and the Acquisition of Startups

William McShane Merih Sevilir

in: IWH Discussion Papers, No. 15, 2023


We propose a novel mechanism through which established firms contribute to the startup ecosystem: the allocation of R&D tax credits to startups via the M&A channel. We show that when established firms become eligible for R&D tax credits, they increase their R&D and M&A activity. In particular, they acquire more venture capital (VC)-backed startups, but not non-VC-backed firms. Moreover, the impact of R&D tax credits on firms’ R&D is increasing with their acquisition of VC-backed startups. The results suggest that established firms respond to R&D tax credits by acquiring startups rather than solely focusing on increasing their R&D intensity in-house. We also highlight evidence that startups do not appear to benefit from R&D tax credits directly, perhaps because they typically lack the taxable income necessary to directly benefit from the tax credits. In this context, established firms can play an intermediary role by acquiring startups and reallocating R&D tax credits, effectively relaxing the financial constraints faced by startups.

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Long-run Competitive Spillovers of the Credit Crunch

William McShane

in: IWH Discussion Papers, No. 10, 2023


Competition in the U.S. appears to have declined. One contributing factor may have been heterogeneity in the availability of credit during the financial crisis. I examine the impact of product market peer credit constraints on long-run competitive outcomes and behavior among non-financial firms. I use measures of lender exposure to the financial crisis to create a plausibly exogenous instrument for product market credit availability. I find that credit constraints of product market peers positively predict growth in sales, market share, profitability, and markups. This is consistent with the notion that firms gained at the expense of their credit constrained peers. The relationship is robust to accounting for other sources of inter-firm spillovers, namely credit access of technology network and supply chain peers. Further, I find evidence of strategic investment, i.e. the idea that firms increase investment in response to peer credit constraints to commit to deter entry mobility. This behavior may explain why temporary heterogeneity in the availability of credit appears to have resulted in a persistent redistribution of output across firms.

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