This paper investigates how the combination of preferences and biases impact the risk-value profile of acquiring firms. We find strong evidence that prior losses impact acquisition risk as firms with negative prior returns are more prone to become acquirers and make value destructive...

We estimate how an acquiring firm's risk changes depending on whether the market initially judges the acquisition to be neutral, strongly negative, or strongly positive for the shareholders of the acquiring firm. We found that for an average neutral acquisition, the annualized standard deviation...

We discuss here the implications that arise for the fundamental duality relationships given by Roy's Identity (1943) and Shephard's Lemma (1953) when the underlying consumer choice problem is dynamic and involves uncertainty