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CEO Narcissism and the Takeover Process: From Private Initiation to Deal Completion

42 Pages Posted: 14 Mar 2011 Last revised: 24 May 2012

Nihat Aktas

WHU - Otto Beisheim School of Management

Eric de Bodt

Université de Lille

Helen Bollaert

SKEMA Business School

Richard Roll

California Institute of Technology

Date Written: May 23, 2012

Abstract

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.

(revised version)

Keywords: mergers and acquisitions, takeover process, CEO, narcissism, hubris, overconfidence

JEL Classification: G34

Suggested Citation

Aktas, Nihat and de Bodt, Eric and Bollaert, Helen and Roll, Richard, CEO Narcissism and the Takeover Process: From Private Initiation to Deal Completion (May 23, 2012). AFA 2012 Chicago Meetings Paper . Available at SSRN: https://ssrn.com/abstract=1784322 or http://dx.doi.org/10.2139/ssrn.1784322

Nihat Aktas

WHU - Otto Beisheim School of Management ( email )

Burgplatz 2
Vallendar, 56179
Germany

Eric De Bodt

Université de Lille ( email )

1 place Déliot, BP381
59020 Lille Cedex
France
+03 20 90 74 77 (Phone)
+03 20 90 77 02 (Fax)

HOME PAGE: http://www.edebodt.net

Helen Bollaert (Contact Author)

SKEMA Business School ( email )

Avenue Willy Brandt
Euralille, 59777
France

Richard W. Roll

California Institute of Technology ( email )

1200 East California Blvd
Mail Code: 228-77
Pasadena, CA 91125
United States
626-395-3890 (Phone)
310-836-3532 (Fax)

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