Abstract

http://ssrn.com/abstract=1081367
 
 

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Are Overconfident CEOs Born or Made? Evidence of Self-Attribution Bias from Frequent Acquirers


Matthew T. Billett


Indiana University - Kelley School of Business - Department of Finance

Yiming Qian


University of Iowa - Department of Finance

January 1, 2008

Management Science, Forthcoming

Abstract:     
We explore the history of mergers and acquisitions made by individual CEOs. Our study has three main findings: (1) CEOs' first deals exhibit zero announcement effects while their subsequent deals exhibit negative announcement effects; (2) While acquisition likelihood increases in the performance associated with previous acquisitions, previous positive performance does not curb the negative wealth effects associated with subsequent deals; (3) CEOs' net purchase of stock is greater preceding subsequent deals than it is for first deals. We interpret these results as consistent with self-attribution bias leading to overconfidence. We also find evidence that the market anticipates future deals based on the CEO's acquisition history and impounds such anticipation into stock prices.

Keywords: overconfidence, hubris, self-attribution, frequent acquirer, mergers and acquisitions

JEL Classification: G31, G32, G34

working papers series


Not Available For Download

Date posted: January 14, 2008 ; Last revised: May 12, 2014

Suggested Citation

Billett, Matthew T. and Qian, Yiming, Are Overconfident CEOs Born or Made? Evidence of Self-Attribution Bias from Frequent Acquirers (January 1, 2008). Management Science, Forthcoming. Available at SSRN: http://ssrn.com/abstract=1081367

Contact Information

Matthew T. Billett
Indiana University - Kelley School of Business - Department of Finance ( email )
1309 E. 10th St.
Bloomington, IN 47405
United States
812-855-3366 (Phone)

Yiming Qian (Contact Author)
University of Iowa - Department of Finance ( email )
S382 Pappajohn Building
Iowa City, IA 52242
United States
319-335-0934 (Phone)
319-335-3690 (Fax)
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