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Are Overconfident CEOs Born or Made? Evidence of Self-Attribution Bias from Frequent Acquirers

Management science, 2008-06, Vol.54 (6), p.1037-1051 [Peer Reviewed Journal]

Copyright 2008 INFORMS ;2008 INIST-CNRS ;Copyright Institute for Operations Research and the Management Sciences Jun 2008 ;ISSN: 0025-1909 ;EISSN: 1526-5501 ;DOI: 10.1287/mnsc.1070.0830 ;CODEN: MSCIAM

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Title:
Are Overconfident CEOs Born or Made? Evidence of Self-Attribution Bias from Frequent Acquirers
Author: Billett, Matthew T ; Qian, Yiming
Subjects: Acquisitions & mergers ; Applied sciences ; Business management ; Business structures ; Business studies ; Cash ; Chief executive officers ; Confidence ; Corporate mergers ; Exact sciences and technology ; Firm modelling ; frequent acquirer ; Hubris ; Insider trading ; Leadership ; Management science ; Market value ; Mergers ; mergers and acquisitions ; Operational research and scientific management ; Operational research. Management science ; overconfidence ; Payment methods ; Portfolio theory ; Public companies ; self-attribution ; Self-esteem ; Senior management ; Stock prices ; Studies ; Wealth effect
Is Part Of: Management science, 2008-06, Vol.54 (6), p.1037-1051
Description: We explore the history of mergers and acquisitions made by individual CEOs. Our study has three main findings: (1) CEOs' first deals exhibit zero announcement effects while their subsequent deals exhibit negative announcement effects; (2) while acquisition likelihood increases in the performance associated with previous acquisitions, previous positive performance does not curb the negative wealth effects associated with subsequent deals; and (3) CEOs' net purchase of stock is greater preceding subsequent deals than it is for first deals. We interpret these results as consistent with self-attribution bias leading to overconfidence. We also find evidence that the market anticipates future deals based on the CEO's acquisition history and impounds such anticipation into stock prices.
Publisher: Linthicum, MD: INFORMS
Language: English
Identifier: ISSN: 0025-1909
EISSN: 1526-5501
DOI: 10.1287/mnsc.1070.0830
CODEN: MSCIAM
Source: ProQuest One Psychology
RePEc
ProQuest Central

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Are Overconfident CEOs Born or Made? Evidence of Self-Attribution Bias from Frequent Acquirers

Copyright 2008 INFORMS ;2008 INIST-CNRS ;Copyright Institute for Operations Research and the Management Sciences Jun 2008 ;ISSN: 0025-1909 ;EISSN: 1526-5501 ;DOI: 10.1287/mnsc.1070.0830 ;CODEN: MSCIAM

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