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I believe I can fly: how target venture CEO overconfidence affects acquisition completion

Author

Listed:
  • David H. Weng

    (California State University)

  • Yasuhiro Yamakawa

    (Babson College)

Abstract

This study examines the role of target venture CEO overconfidence in the acquisitions initiated by established firms. We postulate that the more confident a target venture CEO, the greater the difficulty for an acquirer to negotiate and integrate with the target, reducing the likelihood of a completed acquisition. We further contend that this proposed main effect may vary depending on certain contextual factors. Results based on a sample of acquisitions within the U.S. computer industry suggest that target venture CEO overconfidence reduces the likelihood of acquisition completion and that this effect is contingent on crucial boundary conditions.

Suggested Citation

  • David H. Weng & Yasuhiro Yamakawa, 2023. "I believe I can fly: how target venture CEO overconfidence affects acquisition completion," Small Business Economics, Springer, vol. 61(1), pages 127-151, June.
    • Handle: RePEc:kap:sbusec:v:61:y:2023:i:1:d:10.1007_s11187-022-00679-6
    DOI: 10.1007/s11187-022-00679-6
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    More about this item

    Keywords

    Acquisition completion; Venture CEO overconfidence; Psychological bias; New ventures; Established firms;
    All these keywords.

    JEL classification:

    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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