Explaining the Premium Acquisition by Overconfidence CEO : Case of the French Companies
The introduction of the behavioral dimension in the explanation of the phenomena of mergers and acquisitions has allowed to replace the traditional assumptions of rationality of the participants by potentially more realistic behavioral assumptions. Behavioral corporate finance allows to treat the phenomenon of mergers and acquisitions in a framework widened, incorporating into the analysis the hypothesis of the irrationality of participants in particular the managers of bidders. The present work focuses on studying the relationship between the behavioural bias of managers of bidders such as overconfidence bias, and the premium of acquisition. Firstly, we develop several measures of CEO overconfidence. Secondly, these measures are used to study the effect of overconfidence on premiums acquisitions. From a sample of French firms involved in operations of acquisitions during the period 1999-2007, we show that the overconfident CEO tend to make acquisitions with a higher acquisition premium. We found that four indicators of CEO overconfidence are highly associated with the size of premiums paid: the acquiring company's recent performance, recent media praise for the CEO, a measure of the CEO's self-importance, and a composite factor of these three variables
Year of publication: |
2011
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Authors: | Smaoui, Aida |
Publisher: |
[2011]: [S.l.] : SSRN |
Subject: | Frankreich | France | Führungskräfte | Managers | Übernahme | Takeover |
Description of contents: | Abstract [papers.ssrn.com] |
Saved in:
Extent: | 1 Online-Ressource |
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Type of publication: | Book / Working Paper |
Language: | English |
Notes: | Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments Décembre 12, 2010 erstellt Volltext nicht verfügbar |
Source: | ECONIS - Online Catalogue of the ZBW |
Persistent link: https://www.econbiz.de/10013124080
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