Bias, Identity and M&A

20 Pages Posted: 9 Jun 2020

See all articles by Afra Afsharipour

Afra Afsharipour

University of California, Davis - School of Law ; European Corporate Governance Institute (ECGI)

Date Written: May 13, 2020


M&A transactions are often the most fundamental corporate actions taken by companies. Corporate executives, especially CEOs, play a pivotal role in crafting, negotiating, and closing deals. They are also the chief seller or “cheerleader” of the deal to shareholders and other stakeholders. The actions of executives in M&A deals are aided and monitored by other corporate actors, including the board of directors.

Research on executives’ decisions to move forward on M&A deals suggests that their decision-making is often tainted. The behavioral corporate finance literature has delved deeply into the question of whether behavioral biases and the identity of management impact decision-making in M&A. This research suggests that CEOs, the vast majority of whom are men, are overconfident and driven by peer effects in making M&A decisions, that male CEOs exhibit more overconfidence than women CEOs and that gender diversity on the board can help check CEO overconfidence.

This Essay, written for the New Realism in Business Law and Economics symposium, examines whether existing corporate governance mechanisms, such as fiduciary duty litigation, board independence and greater disclosure, are well-suited for addressing officer accountability, especially if gender plays a significant role in officer biases. It posits that, designing solutions to address bias and identity requires a much deeper evaluation of the interplay between these factors and M&A transactions. The Essay then raises research questions that can help unpack the complicated relationship between bias and identity in M&A. Further analysis into how executives actually experience and execute M&A deals on the ground is vital for us to understand the root causes of behavioral biases and the role that identity plays in perpetuating behavioral biases, and to be able to design solutions that address these root causes.

Keywords: mergers, acquisitions, M&A, gender, diversity, behavioral biases, corporate governance

JEL Classification: K22

Suggested Citation

Afsharipour, Afra, Bias, Identity and M&A (May 13, 2020). 2020 Wisconsin Law Review 469, Available at SSRN:

Afra Afsharipour (Contact Author)

University of California, Davis - School of Law ( email )

Martin Luther King, Jr. Hall
Davis, CA CA 95616-5201
United States


European Corporate Governance Institute (ECGI) ( email )



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