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Learning, hubris and corporate serial acquisitions

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  • AKTAS, Nihat

    (Université catholique de Louvain (UCL). Center for Operations Research and Econometrics (CORE))

  • DE BODT, Eric

    (Université catholique de Louvain (UCL). Center for Operations Research and Econometrics (CORE))

  • ROLL, Richard

Abstract

Recent empirical research has shown that, from deal to deal, serial acquirers' cumulative abnormal returns (CAR) are declining. This has been most often attributed to CEOs hubris. We question this interpretation. Our theoretical analysis shows that (i) a declining CAR from deal to deal is not sufficient to reveal the presence of hubris, (ii) if CEOs are learning, economically motivated and rational, a declining CAR from deal to deal should be observed, (iii) predictions can be derived about the impact of learning and hubris on the time between successive deals and, finally, (iv) predictions about the CAR and about the time between successive deal trends lead to testable empirical hypotheses.

Suggested Citation

  • AKTAS, Nihat & DE BODT, Eric & ROLL, Richard, 2007. "Learning, hubris and corporate serial acquisitions," LIDAM Discussion Papers CORE 2007068, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvco:2007068
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    Cited by:

    1. George Giannopoulos & Ehsan Khansalar & Patel Neel, 2017. "The Impact of Single and Multiple Mergers and Acquisitions on Shareholders¡¯ Wealth of UK Bidder Firms," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 9(3), pages 141-167, March.
    2. Ismail, Ahmad, 2008. "Which acquirers gain more, single or multiple? Recent evidence from the USA market," Global Finance Journal, Elsevier, vol. 19(1), pages 72-84.

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