The effect of reference point prices on mergers and acquisitions

Prior stock price peaks of targets affect several aspects of merger and acquisition activity. Offer prices are biased toward recent peak prices although they are economically unremarkable. An offer's probability of acceptance jumps discontinuously when it exceeds a peak price. Conversely, bidder shareholders react more negatively as the offer price is influenced upward toward a peak. Merger waves occur when high returns on the market and likely targets make it easier for bidders to offer a peak price. Parties thus appear to use recent peaks as reference points or anchors to simplify the complex tasks of valuation and negotiation.     

On Ethically Solvent Leaders: The Roles of Pride and Moral Identity in Predicting Leader Ethical Behavior

The popular media has repeatedly pointed to pride as one of the key factors motivating leaders to behave unethically. However, given the devastating consequences that leader unethical behavior may have, a more scientific account of the role of pride is warranted. The present study differentiates between authentic and hubristic pride and assesses its impact on leader ethical behavior, while taking into consideration the extent to which leaders find it important to their self-concept to be a moral person. In two experiments we found that with higher levels of moral identity, authentically proud leaders are more likely to engage in ethical behavior than hubristically proud leaders, and that this effect is mediated by leaders’ motivation to act selflessly. A field survey among organizational leaders corroborated that moral identity may bring the positive effect of authentic pride and the negative effect of hubristic pride on leader ethical behavior to the forefront.