CEO Narcissism and the Takeover Process: From Private Initiation to Deal Completion
42 Pages Posted: 14 Mar 2011 Last revised: 24 May 2012
Date Written: May 23, 2012
CEO narcissism affects the M&A process. More narcissistic target CEOs obtain higher bid premiums. Acquirer shareholders react less favorably to a takeover announcement when the target CEO is more narcissistic. Among acquiring CEOs, narcissism is associated with initiating deals and negotiating faster. Higher narcissism in both target and acquirer CEOs is associated with a lower probability of deal completion. Our results highlight also the importance of the target to acquirer CEOs relative level of narcissism. To obtain these results, narcissism is measured by the prevalence of personal pronoun usage in more than 1,700 transcripts of CEO speech.
Keywords: mergers and acquisitions, takeover process, CEO, narcissism, hubris, overconfidence
JEL Classification: G34
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