Managerial overconfidence in high and low valuation markets and gains to acquisitions

Behavioral Finance and Capital Markets

“…On average, the market reaction to transaction announcement in the group of bidders with overconfident CFOs is more negative than for the median firm. Croci, Petmezas, and Vagenas-Nanos (2010), using similar methodology on stock option to Malmendier and Tate (2008) and merger data from the United Kingdom, confirm that highly overconfident CEOs lead their firms into more value-destroying acquisitions than their less confident counterparts. John, Liu, and Taffler (2011) explore the parallel role played by overconfident target firm CEOs in explaining the takeover premium and value destruction in such deals.…”

Dressed to merge — small fits fine: M&A success in the fashion and accessories industry

“…Therefore, M&A activity in years with lower P/E ratios is value creating for acquiring shareholders. On the other hand, deals during boom phases are rather viewed as wasteful investment that is often motivated by managerial over-confidence or hubris behavior as proposed by Croci, Petmezas, and Vagenas-Nanos (2010).…”

Long‐Term post‐merger announcement performance. A case study of Australian listed real estate

“…Similarly, Croci et al . () study of UK M&As from 1990 to 2005 also reported insignificant mean monthly ARs. Subsequent studies employing the three‐factor model display mixed results.…”