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Managerial overconfidence and M&A performance : evidence from China.

Guo, M. and Liu, J. and He, Q. and Xin, J.Y. (2020) 'Managerial overconfidence and M&A performance : evidence from China.', International journal of banking accounting and finance., 11 (3). pp. 342-360.

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.

Item Type:Article
Full text:(AM) Accepted Manuscript
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Status:Peer-reviewed
Publisher Web site:https://doi.org/10.1504/IJBAAF.2020.10028269
Date accepted:01 October 2018
Date deposited:09 October 2018
Date of first online publication:2020
Date first made open access:07 April 2021

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