Managerial Overconfidence and M&A Performance: Evidence from China

Guo, M.; Liu, J.; He, Q.; Xin, J.Y.

doi:10.1504/ijbaaf.2020.10028269

Managerial Overconfidence and M&A Performance: Evidence from China

Guo, M.; Liu, J.; He, Q.; Xin, J.Y.

Authors

Professor Michael Guo jie.guo@durham.ac.uk
Professor

J. Liu

Q. He

J.Y. Xin

Abstract

We examine the extent to which managerial overconfidence creates value to acquirers in successful M&As undertaken by Chinese listed firms in the period of 20062012. The empirical results show that Chinese acquirers gain value in both the shortrun and the longrun after the M&A announcement. Our study provides new evidence that the market responds favorably to M&A deals undertaken by acquirers with more managerial overconfidence in both the short run and the long run. Our multivariate analyses, however, show that managerial overconfidence has a minimal role in explaining the stock price movement. In addition, we find that firm size is an important determinant for the relationship between overconfidence and market reaction to merger deals. Taken together, we conclude that managerial overconfidence has little effect in driving merger and acquisition deals in China.

Citation

Guo, M., Liu, J., He, Q., & Xin, J. (2020). Managerial Overconfidence and M&A Performance: Evidence from China. International Journal of Banking, Accounting and Finance, 11(3), 342-360. https://doi.org/10.1504/ijbaaf.2020.10028269

Journal Article Type	Article
Acceptance Date	Oct 1, 2018
Publication Date	2020
Deposit Date	Oct 8, 2018
Publicly Available Date	Apr 7, 2021
Journal	International Journal of Banking, Accounting and Finance
Print ISSN	1755-3830
Electronic ISSN	1755-3849
Publisher	Inderscience
Peer Reviewed	Peer Reviewed
Volume	11
Issue	3
Pages	342-360
DOI	https://doi.org/10.1504/ijbaaf.2020.10028269
Keywords	Mergers and Acquisitions; Market Performance; Managerial Overconfidence; Chinese Market
Public URL	https://durham-repository.worktribe.com/output/1317375