Blockholder Identity, Equity Ownership Structures and Hostile Takeovers

We determine firms' equity ownership structures and provide a theory of hostile takeovers by distinguishing the roles of two types of blockholders: rich investors and institutional investors. We also distinguish the roles of two types of stock markets: the block market and the market with small investors. Rich investors have their own money at stake while institutional investors are run by proffessional managers and hence face agency conflicts. Because rich investors face no agency problems they are better at monitoring managers. If their wealth is insufficient to control all corporations, then "agency-cost free" capital is scarce. We investigate the allocation of this scarce resource. A hostile takeover is the consequence of a state-contingent allocation of agency-cost free capital. We show that only rich investors engage in hostile takeovers. Institutional investors instead are either permanent blockholding monitors or facilitate takeovers by selling blocks to rich investors. Even though all firms are ex ante identical, some may rely on the takeover mechanism while others rely on permanent institutional monitoring. We characterize the ownership structure of firms showing, in particular, that (ex ante) identical firms can have different ownership structures. Some can have initially dispersed ownership while others have an institutional blockholder.

Eat or Be Eaten: A Theory of Mergers and Merger Waves

In this paper, we present a model of defensive mergers and merger waves. We argue that mergers and merger waves can occur when managers prefer that their firms remain independent rather than be acquired. We assume that managers can reduce their chance of being acquired by acquiring another firm and hence increasing the size of their own firm. We show that if managers value private benefits of control sufficiently, they may engage in unprofitable defensive acquisitions. A technological or regulatory change that makes acquisitions profitable in some future states of the world can induce a preemptive wave of unprofitable, defensive acquisitions. The timing of mergers, the identity of acquirers and targets, and the profitability of acquisitions depend on the size of the private benefits of control, managerial equity ownership, the likelihood of a regime shift that makes some mergers profitable, and the distribution of firm sizes within an industry.

Paper millionaires: How valuable is stock to a stockholder who is restricted from selling it?

Many firms have stockholders who face severe restrictions on their ability to sell their shares and diversify the risk of their personal wealth. We study the costs of these liquidity restrictions on stockholders using a continuous-time portfolio choice framework. These restrictions have major effects on the optimal investment and consumption strategies because of the need to hedge the illiquid stock position and smooth consumption in anticipation of the eventual lapse of the restrictions. These results provide a number of important insights about the effects of illiquidity in financial markets.

Eat or be eaten: a theory of mergers and firm size

We propose a theory of mergers that combines managerial merger motives and a regime shift that may lead to some value- increasing merger opportunities. Anticipation of the regime shift can lead to mergers, either for defensive or positioning reasons. Defensive mergers occur when managers acquire other firms to avoid being acquired themselves. Mergers may also allow a firm to position itself as a more attractive takeover target and earn a takeover premium. The identity of acquirers and targets and the profitability of acquisitions depend, among other factors, on the distribution of firm sizes within an industry.Bank mergers

Adaptive Aggregation Based Domain Decomposition Multigrid for the Lattice Wilson Dirac Operator

In lattice QCD computations a substantial amount of work is spent in solving discretized versions of the Dirac equation. Conventional Krylov solvers show critical slowing down for large system sizes and physically interesting parameter regions. We present a domain decomposition adaptive algebraic multigrid method used as a precondtioner to solve the "clover improved" Wilson discretization of the Dirac equation. This approach combines and improves two approaches, namely domain decomposition and adaptive algebraic multigrid, that have been used seperately in lattice QCD before. We show in extensive numerical test conducted with a parallel production code implementation that considerable speed-up over conventional Krylov subspace methods, domain decomposition methods and other hierarchical approaches for realistic system sizes can be achieved.Comment: Additional comparison to method of arXiv:1011.2775 and to mixed-precision odd-even preconditioned BiCGStab. Results of numerical experiments changed slightly due to more systematic use of odd-even preconditionin

Structure Identification of Dynamical Takagi-Sugeno Fuzzy Models by Using LPV Techniques

In this paper the problem of order selection for nonlinear dynamical Takagi-Sugeno (TS) fuzzy models is investigated. The problem is solved by formulating the TS model in its Linear Parameter Varying (LPV) form and applying a recently proposed Regularized Least Squares SupportVector Machine (R-LSSVM) technique for LPV models. In contrast to parametric identification approaches, this non-parametric method enables the selection of the model order without specifying the scheduling dependencies of the model coefficients. Once the correct model order is found, a parametric TS model can be re-estimated by standard methods. Different re-estimation approaches are proposed. The approaches are illustrated in a numerical example

Modeling human stability and change in organizations

This extended abstract describes current work in progress on so-called micro-foundations of organizational routines. These are individual-level human processes assumed responsible for the emergence of routines. Recent agent-based models in organization science focus on psychological mechanisms operationalizing the stability of human behavior. As similar concepts exist in creativity research, the aim of this project is to facilitate a dialogue between organization scientists and creativity researchers in order gain insight on these processes. The latter will subsequently be implemented in agent-based models of generic as well as applied routines to test and compare models of these micro-foundations

Aggregation-based Multilevel Methods for Lattice QCD

In Lattice QCD computations a substantial amount of work is spent in solving the Dirac equation. In the recent past it has been observed that conventional Krylov solvers tend to critically slow down for large lattices and small quark masses. We present a Schwarz alternating procedure (SAP) multilevel method as a solver for the Clover improved Wilson discretization of the Dirac equation. This approach combines two components (SAP and algebraic multigrid) that have separately been used in lattice QCD before. In combination with a bootstrap setup procedure we show that considerable speed-up over conventional Krylov subspace methods for realistic configurations can be achieved.Comment: Talk presented at the XXIX International Symposium on Lattice Field Theory, July 10-16, 2011, Lake Tahoe, Californi