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Research Seminar By Prof. Kiran Pedada
On June 7th, Professor Kiran Pedada from the University of Manitoba delivered an engaging research presentation. His research explores the implications of the General Data Protection Regulation (GDPR) on the financial returns from acquisitions of AI technology focused on delivering superior value for customers, specifically customer-centric AI investments. The study examines the effects of GDPR on both deal valuation and the acquirer's systematic risk, proposing that consumer trust in a brand is a key mechanism behind the financial returns from these investments.
Prof Kiran and his coauthors tested their hypotheses using a unique dataset of 432 AI-related deals made by 316 U.S. and European firms and investors between 2009 and 2022, supplemented by a lab experiment with 640 U.S.-based M-Turk participants. The findings indicate that GDPR exposure generally reduces AI deal valuations and increases investor risk. However, these effects are mitigated when the acquired AI technology has a customer-centric focus. Post-GDPR, the deal sizes of firms acquiring AI technologies aimed at enhancing customer experience increased by 5.4 percentage points, while systematic risk decreased by 1.55 percentage points. The lab experiment supports consumer trust as an explanatory mechanism for these effects.
This study contributes to the emerging literature on customer privacy and AI marketing strategy, offering valuable insights for investors, firms introducing new AI technologies to the market, and regulators. The presentation concluded with an interactive discussion and Q&A session between Professor Kiran and the faculty members.
