Controlling Shareholders and the Acquisition Premiums Paid in European Takeover Bids

This paper examines the incentives of controlling shareholders in the market for corporate control. We investigate the takeover premiums paid by a sample of European acquiring firms with concentrated voting rights structures. The results show a positive relationship between takeover premiums and the bidder's concentration of both voting rights and excess voting rights over cash-flow rights. With higher levels of bidder entrenchment, the valuation of a takeover target increasingly reflects the private benefits of control which bidders seek to extract from a dealControlling shareholders ; separation between the ownership and the control ; takeover premiums ; private benefits

Investor Protection and the Value Effects of Bank Merger Announcements in Europe and the US

Investor protection regimes have been shown to partly explain why the same type of corporate event may attract different investor reactions across countries. We compare the value effects of large bank merger announcements in Europe and the US and find an inverse relationship between the level of investor protection prevalent in the target country and abnormal returns that bidders realize during the announcement period. Accordingly, bidding banks realize higher returns when targeting low protection economies (most European economies) than bidders targeting institutions which operate under a high investor protection regime (the US). We argue that bidding bank shareholders need to be compensated for an increased risk of expropriation by insiders which they face in a low protection environment where takeover markets are illiquid and there are high private benefits of control

The Risk Implications of Insurance Securitization: The Case of Catastrophe Bonds

Catastrophe (Cat) bonds are insurance securitization vehicles which are supposed to transfer catastrophe-related underwriting risk from issuers to capital markets. This paper addresses key, unanswered questions concerning Cat bonds and offers the following results. First, our findings show firms that issue Cat bonds exhibit less risky underwriting portfolios with less exposure to catastrophe risks and overall less need to hedge catastrophe risk. These results show that the access to the market for insurance securitization is easiest for firms with less risky portfolios. Second, firms that issue Cat bonds are found to experience a reduction in their default risk relative to non-issuing firms and our results, therefore, demonstrate that Cat bonds provide effective catastrophe hedging for issuing firms. Third, firms with less catastrophe exposure, increase their catastrophe exposure following an issue. Therefore, our paper cautions that the ability to hedge catastrophe risk causes some firms to seek additional catastrophe risk

Machine Psychology: Investigating Emergent Capabilities and Behavior in Large Language Models Using Psychological Methods

Large language models (LLMs) are currently at the forefront of intertwining AI systems with human communication and everyday life. Due to rapid technological advances and their extreme versatility, LLMs nowadays have millions of users and are at the cusp of being the main go-to technology for information retrieval, content generation, problem-solving, etc. Therefore, it is of great importance to thoroughly assess and scrutinize their capabilities. Due to increasingly complex and novel behavioral patterns in current LLMs, this can be done by treating them as participants in psychology experiments that were originally designed to test humans. For this purpose, the paper introduces a new field of research called "machine psychology". The paper outlines how different subfields of psychology can inform behavioral tests for LLMs. It defines methodological standards for machine psychology research, especially by focusing on policies for prompt designs. Additionally, it describes how behavioral patterns discovered in LLMs are to be interpreted. In sum, machine psychology aims to discover emergent abilities in LLMs that cannot be detected by most traditional natural language processing benchmarks

Why we need biased AI -- How including cognitive and ethical machine biases can enhance AI systems

This paper stresses the importance of biases in the field of artificial intelligence (AI) in two regards. First, in order to foster efficient algorithmic decision-making in complex, unstable, and uncertain real-world environments, we argue for the structurewise implementation of human cognitive biases in learning algorithms. Secondly, we argue that in order to achieve ethical machine behavior, filter mechanisms have to be applied for selecting biased training stimuli that represent social or behavioral traits that are ethically desirable. We use insights from cognitive science as well as ethics and apply them to the AI field, combining theoretical considerations with seven case studies depicting tangible bias implementation scenarios. Ultimately, this paper is the first tentative step to explicitly pursue the idea of a re-evaluation of the ethical significance of machine biases, as well as putting the idea forth to implement cognitive biases into machines

Beyond the Prediction Paradigm: Challenges for AI in the Struggle Against Organized Crime

In the future, audiological rehabilitation of adults with hearing loss will be more available, personalized and thorough due to the possibilities offered by the internet. By using the internet as a platform it is also possible to perform the process of rehabilitation in a cost-effective way. With tailored online rehabilitation programs containing topics such as communication strategies, hearing tactics and how to handle hearing aids it might be possible to foster behavioral changes that will positively affect hearing aid users. Four studies were carried out in this thesis. The first study investigated internet usage among adults with hearing loss. In the second study the administration format, online vs. paper- and pencil, of four standardized questionnaires was evaluated. Finally two randomized controlled trials were performed evaluating the efficacy of online rehabilitation programs including professional guidance by an audiologist. The programs lasted over five weeks and were designed for experienced adult hearing-aid users. The effects of the online programs were compared with the effects of a control group. It can be concluded that the use of computers and the internet overall is at least at the same level for people with hearing loss as for the general age-matched population in Sweden. Furthermore, for three of the four included questionnaires, the participants’ scores remained the same across formats. It is however recommended that the administration format remain consistent across assessment points. Finally, results from the two concluding intervention studies provide preliminary evidence that the internet can be used to deliver education and rehabilitation to experienced hearing aid users who report residual hearing problems and that their problems are reduced by the intervention; however the content and design of the online rehabilitation program requires further investigation

What do premiums paid for bank M&As reflect? the case of the European Union

We analyze the takeover premiums paid for a sample of European bank mergers between 1997 and 2007. We find that acquiring banks value profitable, high-growth, and low-risk targets. We also find that the strength of bank regulation and supervision and of deposit insurance regimes in Europe has measurable effects on takeover pricing. Stricter bank regulatory regimes and stronger deposit insurance schemes lower the takeover premiums paid by acquiring banks. This result, presumably in anticipation of higher compliance costs, is mainly driven by domestic deals. Also, we find no conclusive evidence that bidders seek to extract benefits from regulators either by paying a premium for deals in less regulated regimes or becoming too big to fail.