Who Makes Acquisitions ? CEO Overcon dence and the Market s Reaction

  title={Who Makes Acquisitions ? CEO Overcon dence and the Market s Reaction},
  author={Ulrike Malmendier},
We analyze the impact of CEO overconfidence on mergers and acquisitions. Overconfident CEOs over-estimate their ability to generate returns, both in their current firm and in potential takeover targets. Thus, on the margin, they undertake mergers that destroy value. Overconfidence also implies that managers view their company as undervalued by outside investors. Therefore, the impact of overconfidence is strongest when CEOs can finance mergers internally. We test these predictions using the… CONTINUE READING
Highly Cited
This paper has 116 citations. REVIEW CITATIONS


Publications referenced by this paper.
Showing 1-10 of 98 references

Personal contact, individuation, and the better-than-average e ect.

Mark D Alicke, M. L Klotz, David L Breitenbecher, Tricia J Yurak
Journal of Personality & Social Psychology, • 1995
View 4 Excerpts
Highly Influenced

Stock market driven acquisitions

Andrei Shleifera, Robert W. Vishnyb, René Stulz

Judgment in Managerial Decision Making (5th Edition)

Bazerman, H Max
Hoboken, NJ: John Wiley & Sons,Inc., • 2002

Portfolio considerations in valuing executive compensation

Owen Lamont, Christopher Polk
Journal of Accounting Research • 2002
View 1 Excerpt

Testing tradeo and pecking order predictions about dividends and debt.

Fama, F Eugene, French, R Kenneth
Review of Financial Studies, Spring 2002, • 2002

Similar Papers

Loading similar papers…