The first essay of this dissertation is about the Catastrophe bond. The catastrophe bond market is a good place to reveal how investors think about the climate risk in the mid-term foreseeable future. By studying catastrophe bond market transaction data, I find out that investors treat climate related bonds and non-climate related bonds differently. The yield difference between short-term climate related bonds and mid-term climate related bonds is significantly higher than the yield difference between short-term non-climate related bonds and mid-term non-related bonds. This yield difference is not caused by annual climate seasonality, different local property value growths, and different term structures. Tests on the implied hazard rate of catastrophe bonds show similar results. I also find that the difference in yield difference between climate related bonds and non-climate related bonds gets larger after some major climate related disaster events happened between the year 2017 and the year 2018, which indicates that this difference could be connected to the investors' perception of the uncertainty of future climate situations. The second essay of the dissertation is related to venture capital. It addresses the necessity and benefits of expanding venture capital fund's investment selection pool geographically. We find out that funds with high expertise concentration levels tend to invest further away than funds with relatively low expertise concentration levels, especially when funds are not located in California. What's more, our results show that funds with larger geographic coverage outperform others, and funds with high expertise concentration levels outperform funds with relatively low expertise concentration levels in general. The out-performance is consistent across all funds' spectrum. Last but not least, we find that funds' faraway investments outperform their own nearby investments in terms of excess IPO rate and excess fail rate, which can provide a useful guideline for venture capital funds.
Read
