0000000000266369
AUTHOR
Andrej Gill
Mirror, Mirror on the Wall: Machine Predictions and Self-Fulfilling Prophecies
We show that disclosing machine predictions to affected parties can trigger self-fulfilling prophecies. In an investment game, we experimentally vary investors’ and recipients’ access to a machine prediction about recipients’ likelihood to pay back an investment. Recipients who privately learn about an incorrect machine prediction alter their behavior in the direction of the prediction. Furthermore, when recipients learn that an investor has disregarded a machine prediction of no-repayment, this further lowers the repayment amount. We interpret these findings as evidence that transparency regarding machine predictions can alter recipients’ beliefs about what kind of person they are and what…
Intellectual Property and Leverage: The Role of Patent Portfolios
This paper analyses the importance of intellectual property in determining capital structure decisions. We argue that firms can use their patent stock as collateral and thereby relax possible debt financing restrictions. Using data from the European Patent Office and balance sheet data of European companies, we find that larger and more valuable patent stocks lead to higher debt-ratios - controlling for well-established capital structure determinants. We further assess variation across as well as within industries and show that effects are mainly driven by tech-oriented and research intensive firms. Drawing on a legislative change in EU- law, allows us to establish a causal relationship bet…
Going Public – Going Private: The Case of VC-Backed Firms
We investigate the decisions of listed firms to go private once again. We start by revealing that while a significant number of firms which go public is VC-backed, an overproportional share of these VC-backed firms go private later on (they stay on the exchange for an average of 8.5 years). We interpret this very robust pattern such that IPOs of VC-backed firms are to a large extent a temporary rather than a permanent feature of the corporate governance of these firms.We investigate various potential hypotheses why VCs actually seem to be able to bring marginal firms to the exchange by relating the going-private decisions to various characteristics of the IPO market as well as to VC charact…