Serial Acquirer Bidding: An Empirical Test of the Learning Hypothesis
Skema Business School
Eric De Bodt
Université Lille Nord de France - SKEMA Business School
University of California, Los Angeles (UCLA) - Finance Area
July 7, 10
Paris December 2009 Finance International Meeting AFFI - EUROFIDAI
Journal of Corporate Finance, Forthcoming
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: G34working papers series
Date posted: October 7, 2009 ; Last revised: October 23, 2010
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