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Serial Acquirer Bidding: An Empirical Test of the Learning HypothesisNihat AktasSkema Business School Eric De BodtUniversité Lille Nord de France - SKEMA Business School Richard RollUniversity of California, Los Angeles (UCLA) - Finance Area July 7, 10 Paris December 2009 Finance International Meeting AFFI - EUROFIDAI Journal of Corporate Finance, Forthcoming Abstract: Recent academic studies indicate that acquirers’ cumulative abnormal returns (CAR) decline from deal to deal in acquisitions programs. Does this pattern suggest hubristic CEO behaviors are significant enough to influence average CAR patterns during acquisitions programs? An alternative explanation is CEO learning. This study therefore tests for learning using successive acquisitions of large U.S. public targets undertaken by U.S. acquirers. A dynamic framework reveals that both rational and hubristic CEOs take on average investor reactions to their previous deals into account and adjust their bidding behavior accordingly. These results are consistent with a learning hypothesis.
Number of Pages in PDF File: 37 Keywords: Acquisitions program, Learning, Hubris, Bid premium JEL Classification: G34 working papers seriesDate posted: October 7, 2009 ; Last revised: October 23, 2010Suggested CitationContact Information
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