The blind power: Power-led CEO overconfidence and M&A decision making |
| |
Affiliation: | 1. Sauder School of Business, University of British Columbia, 2053 Main Mall, Vancouver BC V6T 1Z2, Canada;2. David Eccles School of Business, University of Utah, 1655 E. Campus Center Dr., Salt Lake City, UT 84112, United States |
| |
Abstract: | The behavioral finance literature attributes failed M&As to CEO overconfidence. We investigate the source of CEO overconfidence that leads to failed M&As. Among various determinants of CEO overconfidence, we propose that power-led CEO overconfidence delivers undesirable consequences in corporate investments. Using CEO-level data, we find that CEO power increases the probability of a CEO being overconfident. We also show that power-led overconfident CEOs tend to complete more deals regardless of economic circumstances, do stock acquisitions, and make diversifying acquisitions, relative to non-overconfident CEOs. The results suggest that the findings of previous studies on M&As by overconfident CEOs could be driven by power-led overconfident CEOs. |
| |
Keywords: | CEO overconfidence CEO power Mergers and acquisitions Corporate governance |
本文献已被 ScienceDirect 等数据库收录! |
|