【公开学术报告-第142期】Pessimism Bias: Terrorist-Stricken VCs and Their Likelihood of Investment Termination

Pessimism Bias: Terrorist-Stricken VCs and Their Likelihood of Investment Termination

Speaker: Dr. Jun Xu (Postdoctoral Research Fellow, HK PolyU)

Date & Time: Wed. 15, October 2025, from 14:00 to 15:30 (Beijing Time)

Place: Tongji Building A2101 

ABSTRACT

This study investigates how extremely negative events influence venture capital (VC) firms’ investment decisions. Psychology research suggests that sudden and distressing events induce a pessimism bias, which makes decision-makers overestimate negative outcomes and underestimate positive ones. We exploit the occurrence of terrorist attacks and mass shootings between 1997 and 2020 at VC firm locations across the United States as an exogenous shock in the VCs’ experience of negative events. We find that, relative to non-affected VC firms, terrorist-stricken VC firms are significantly more likely to terminate investments in their portfolio ventures. Moreover, this relationship is weaker if the ventures are co-located with the VC firms and is stronger if the ventures are in the early stage. In other words, termination patterns reflect a risk aversion consistent with a pessimism bias. Collectively, these findings indicate whether and how exposure to extremely negative events affects VC decision-making.

GUEST BIO:

Jun Xu is a Postdoctoral Research Fellow in the Department of Management and Marketing at The Hong Kong Polytechnic University (2024–present). He earned his Ph.D. in Business Administration (2019–2024) from the A. Gary Anderson Graduate School of Business, University of California, Riverside, where his committee was chaired by Jerayr 'John' Haleblian and included Marlo Raveendran, Yawen Jiao, Haibo Liu, and Tony Tong (University of Colorado, Boulder). Previously, he completed an MPhil in Business Administration (2015–2019, advised by Wilson Tong and June Cheng) and an M.S. in Accountancy (2014–2015) at The Hong Kong Polytechnic University, and holds a B.A. in Business Administration with a concentration in Financial Management (2008–2012) from Yunnan University of Finance and Economics. His research interests focus on Corporate Strategy and Entrepreneurial Finance.