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The Application of Anchoring Effect on Corporate M&A Transaction

In: Proceedings of the 2022 2nd International Conference on Economic Development and Business Culture (ICEDBC 2022)

Author

Listed:
  • Mengyu Diao

    (University of International Relations, School of Economics and Finance)

Abstract

Corporate M&A transactions have been studied from many perspectives, such as executives’ status and their cognitive bias such as the anchoring effect, which is easily overlooked but has a broad impact. Inevitably, during the M&A process, decision-makers are subject to cognitive biases such as the anchoring effect. Chen Shihua et al. First analyzed the anchoring effect on corporate M&A transactions in 2016. In this essay, based on previous studies, this paper uses questionnaires and experiments to further the role played by self-generated and externally provided anchors during the decision-making process. The experiment found that the self-generated anchor caused a greater impact and its influence is more easily weakened by advisors. This proves that advisors are indispensable and that the anchoring effect is not completely insurmountable.

Suggested Citation

  • Mengyu Diao, 2022. "The Application of Anchoring Effect on Corporate M&A Transaction," Advances in Economics, Business and Management Research, in: Yushi Jiang & Yuriy Shvets & Hrushikesh Mallick (ed.), Proceedings of the 2022 2nd International Conference on Economic Development and Business Culture (ICEDBC 2022), pages 738-743, Springer.
    • Handle: RePEc:spr:advbcp:978-94-6463-036-7_108
    DOI: 10.2991/978-94-6463-036-7_108
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