Paola Sapienza
Paola Sapienza

FINANCE
Donald C. Clark/HSBC Chair in Consumer Finance
Professor of Finance
Zell Center Faculty Fellow

Print Overview

Paola Sapienza is the Merrill Lynch Capital Markets Research Professor at the Kellogg School of Management. She also serves as a faculty fellow for the Zell Center for Risk Research, a research affiliate of the Center for Economic Policy Research and a faculty research fellow in the National Bureau of Economic Research's program on corporate finance.

Sapienza's areas of expertise include banking and financial institutions, behavioral economics, behavioral finance, corporate finance, emerging markets and regulation of financial markets, private equity and venture capital. Sapienza has written articles on banking, social capital, trust and financial development. Her work has been published in such journals as the American Economic Review, the Quarterly Journal of Economics, the Journal of Finance, the Journal of Financial Economics, and Science. She currently serves as an associate editor of The Journal of Finance. As a by-product of her research on trust and financial markets, she launched the Chicago Booth/Kellogg School Financial Trust Index, along with Luigi Zingales (University of Chicago Booth School of Business). She holds a teaching affiliation with the Kellogg School’s Heizer Center for Private Equity and Venture Capital.

Prior to joining Kellogg, Sapienza worked as an economist in the research department of Bank of Italy. She received a bachelor's degree in economics summa cum laude from Università Bocconi in Italy, and an MA and PhD in Economics from Harvard University.

Professor Sapienza is an independent board member of Assicurazioni Generali SpA since April 2010 and an elected director of the American Finance Association since January 2011.



Areas of Expertise
Banking and Financial Institutions
Behavioral Economics
Behavioral Finance
Corporate Finance
Emerging Markets
Regulation of Financial Markets
Print Vita
Education
PhD, 1998, Economics, Harvard University
MA, 1993, Economics, Harvard University
Laurea, 1989, Economics, Bocconi University, Milan, Summa Cum Laude

Academic Positions
Professor, Finance, Kellogg School of Management, Northwestern University, 2009-present
Faculty Affiliate, International Organizations & International Law (IO/IL) Working Group, Buffett Center for International and Comparative Studies, Northwestern University, 2008-present
Research Associate, National Bureau of Economic Research, 2007-present
Research Fellow, Centre for Economic Policy Research, 2007-present
Faculty Fellow, Zell Center for Risk Research, Northwestern University, 2006-present
Faculty Fellow, Center for International Economics and Development, Northwestern University, 2000-present
Faculty Affiliate, Roberta Buffett Center for International and Comparative Studies, Northwestern University
Ford Visiting Associate Professor, Finance, Booth School of Business, University of Chicago, 2008-2009
Associate Professor, Finance, Kellogg School of Management, Northwestern University, 2006-2009
Visiting Fellow, GSB Initiative on Global Markets, University of Chicago, 2009-2009
Faculty Research Fellow, National Bureau of Economic Research, 1999-2007
Research Affiliate, Centre for Economic Policy Research, 1998-2007
Assistant Professor, Finance, Kellogg School of Management, Northwestern University, 1998-2006

Grants and Awards
Smith Breeden Distinguished Paper Award, Journal of Finance, 2009
Elected Director of the American Finance Association, 2012-2014

Editorial Positions
Associate Editor, Journal of Finance, 2013-present
Associate Editor, Management of Science, 2009-present
Associate Editor, Journal of Economic Perspectives, 2005-2008

 
Print Research
Research Interests
Financial development, financial institutions, political economy, behavioral economics

Articles
Guiso, Luigi, Paola Sapienza and Luigi Zingales. 2013. The Determinants of Attitudes towards Strategic Defaults in Mortgages. Journal of Finance. 68(4): 1473-1515.
Sapienza, Paola, Anna Toldra and Luigi Zingales. 2013. Understanding Trust. The Economic Journal. Doi:10.1111/ecoj.12036
Sapienza, Paola and Luigi Zingales. 2013. Economic Experts versus Average Americans. American Economic Review: Papers and Proceedings. 103(3): 636-642.
Reuben, Ernesto G, Pedro Rey-Biel, Paola Sapienza and Luigi Zingales. 2012. The emergence of male leadership in competitive environments. Journal of Economic Behavior and Organization. 83(1): 111-117.
Sapienza, Paola and Luigi Zingales. 2012. A Trust Crisis. International Review of Finance. 12(2): 123-131.
Maestripieri, Dario, Paola Sapienza and Luigi Zingales. 2010. Between- and Within-sex Variation in Hormonal Responses to Economic Decision Making Tests in a Large Sample of MBA Students. Stress. 13(5): 413-424.
Ravina, Enrichetta and Paola Sapienza. 2010. What Do Independent Directors Know? Evidence from Their Trading. Review of Financial Studies. 23(3): 962-1003.
Reuben, Ernesto G, Paola Sapienza and Luigi Zingales. 2010. Time Discounting for Primary and Monetary Rewards. Economic Letters. 106: 125-127.
Maestripieri, Dario, Paola Sapienza and Luigi Zingales. 2009. Gender Differences in Financial Risk Aversion and Career Choices are Affected by Testosterone. Proceedings of the National Academy of Science. 106(36): 15268-15273.
Guiso, Luigi, Paola Sapienza and Luigi Zingales. 2009. Cultural Biases in Economic Exchange. Quarterly Journal of Economics. 124(4): 1095-1131.
Reuben, Ernesto G, Paola Sapienza and Luigi Zingales. 2009. Is Mistrust Self-Fulfilling?. Economics Letters. 104(2): 89-91.
Sapienza, Paola. 2009. A Lobbying Approach to Evaluating the Sarbanes-Oxley. Journal of Accounting Research. 47(2): 519-583.
Polk, Christopher and Paola Sapienza. 2009. The Stock Market and Corporate Investment: a Test of Catering Theory. Review of Financial Studies. 22(1): 187-217.
Guiso, Luigi, Paola Sapienza and Luigi Zingales. 2008. Trusting the Stock Market. Journal of Finance. 63(6): 2557-2600.
Guiso, Luigi, Ferdinando Monte, Paola Sapienza and Luigi Zingales. 2008. Culture, Gender, and Math. Science. 320(2880): 1164-1165.
Guiso, Luigi, Paola Sapienza and Luigi Zingales. 2008. Alfred Marshall Lecture -- Social Capital as Good Culture. Journal of the European Economic Association. 6(2-3): 295-320.
Guiso, Luigi, Paola Sapienza and Luigi Zingales. 2006. Does Culture Affect Economic Outcomes?. Journal of Economic Perspectives. 20(2): 23-48.
Guiso, Luigi, Paola Sapienza and Luigi Zingales. 2004. Does Local Financial Development Matter?. Quarterly Journal of Economics. 119(3): 929-969.
Guiso, Luigi, Paola Sapienza and Luigi Zingales. 2004. The Role of Social Capital in Financial Development. American Economic Review. 94(3): 526-556.
Sapienza, Paola. 2004. The Effects of Government Ownership on Bank Lending. Journal of Financial Economics. 72(2): 357-384.
Reprinted in:
A Reader in International Corporate Finance, edited by Stijn Claessens and Luc Laeven, 259-286. Washington, DC: World Bank Publications, 2006.
Guiso, Luigi, Paola Sapienza and Luigi Zingales. 2003. People’s Opium? Religion and Economic Attitudes. Journal of Monetary Economics. 50(1): 225-282.
Sapienza, Paola. 2002. The Effects of Banking Mergers on Loan Contracts. Journal of Finance. 57(1): 329-367.
Sapienza, Paola. 2001. The Bright Side of Internal Capital Markets: Discussion. Journal of Finance. 56(4): 1528-1531.
Working Papers
Guiso, Luigi, Paola Sapienza and Luigi Zingales. 2011. Time Varying Risk Aversion.
Sapienza, Paola and Luigi Zingales. 2009. Can We Infer Social Preference from the Lab? Evidence from the Trust Game.
Reuben, Ernesto G, Paola Sapienza and Luigi Zingales. 2009. Procrastination and Impatience.
Guiso, Luigi, Paola Sapienza and Luigi Zingales. 2008. Long Term Persistence.
Guiso, Luigi, Paola Sapienza and Luigi Zingales. 2007. The cost of banking regulation.
Book Chapters
Guiso, Luigi, Paola Sapienza and Luigi Zingales. 2011. "Civic Capital as the Missing Link." In Social Economics Handbook, edited by Jess Benhabib, Alberto Bisin and Matthew O. Jackson, vol. 1, 417-480. Elsevier.
Sapienza, Paola. 2005. "Comments on Lessons from Case Studies on Large Insolvencies." In Systematic Financial Crises: Resolving Large Bank Insolvencies, edited by Douglas D. Evanoff and George G. Kaufman, 391-394. New Jersey: World Scientific.
Cases
Sapienza, Paola, Vineet Bhagwat and Apaar Kasliwal. 2012. Surya Tutoring: Evaluating a Growth Equity Deal in India. Case 5-312-501 (KEL679).

 
Print Teaching
Teaching Interests

Corporate Finance

Private Equity and Venture Capital


Full-Time / Part-Time MBA
Entrepreneurial Finance and Venture Capital (FINC-445-0)

This course counts toward the following majors: Entrepreneurship & Innovation, Finance.

This course uses the case method to study entrepreneurial finance and venture capital decision focusing on the funding decisions of start-ups (fast growing entrepreneurial firms). The goal is to understand how entrepreneurs can raise funds and how venture capital partnerships and growth equity funds choose, value, structure, fund, and manage their investments. The course covers all stages of the financing process, from startup to harvest. Several cases concern technology-based businesses, though the emphasis is on gaining insights into entrepreneurial finance, not technology per se. The course will go into great details with respect to structuring multi-staged financings and valuing entrepreneurial ventures. In addition, the course provides insights on how venture capital partnership work, why do they take the forms they do, and where the crucial problems and opportunities for innovation exists. Consideration is given to the incentives faced by venture capital partnerships and the investors in those partnerships, and how to properly make financing decisions and negotiate contractual terms. Emphasis is given to high growth start-ups searching for funding in the US and venture capital funding as opposed to more traditional entrepreneurial and family firms operating globally (see FINC945 for these topics) and to Leverage Buyouts (see FINC-448 for LBOs). The course is aimed primarily at people who may be involved in an entrepreneurial venture at some point in their careers whether in a large organization, a turnaround, a management buyout or a startup. The course is also useful for venture capital careers.

Doctoral
Empirical Corporate Finance (FINC-489-0)
This course prepares Ph.D. students to do research in empirical corporate finance. The course is organized around published and working papers in the field with an emphasis on econometric methods. Rather than providing an exhaustive overview of the field, the course focuses on selected topics in depth to illustrate different empirical approaches to the same or related questions. Using papers on corporate finance, the course highlights the following empirical themes: endogeneity, difference in difference estimators and event studies.

Executive MBA
Entrepreneurial Finance & Venture Capital (FINCX-446-0)
Entrepreneurial activity has been a potent source of innovation and job generation in the global economy. In the U.S., the majority of new jobs are generated by new entrepreneurial firms. The financial issues confronting entrepreneurial firms are drastically different from those faced by established companies. The focus on this course will be on analyzing the unique financial issues faced by high growth entrepreneurial firms (think: high growth startups), including the different sources of financing and the type of contracts offered to these type of firms.