IDEAS home Printed from https://ideas.repec.org/a/eee/finlet/v58y2023ipcs1544612323008528.html
   My bibliography  Save this article

Managerial decision, anchoring effects and acquisition premiums

Author

Listed:
  • Sun, Yi
  • Xu, Shuaiqi
  • Wang, Yin

Abstract

This paper explores the anchoring effect, which is an irrational factor influencing decision-making regarding M&A premiums in M&A events. The study focuses on a sample of M&A transactions conducted by Chinese A-share listed companies between 2007 and 2021. We present significant evidence of the internal anchor anchoring effect in the M&A process in the internal anchor subsample. In the external anchor subsample demonstrates that external anchors have a certain degree of anchoring effects. When both anchors are present, the internal anchor exhibits a more significant anchoring effect compared to the external anchor.

Suggested Citation

  • Sun, Yi & Xu, Shuaiqi & Wang, Yin, 2023. "Managerial decision, anchoring effects and acquisition premiums," Finance Research Letters, Elsevier, vol. 58(PC).
    • Handle: RePEc:eee:finlet:v:58:y:2023:i:pc:s1544612323008528
    DOI: 10.1016/j.frl.2023.104480
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1544612323008528
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.frl.2023.104480?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Eduardsen, Jonas & Marinova, Svetla, 2020. "Internationalisation and risk: Literature review, integrative framework and research agenda," International Business Review, Elsevier, vol. 29(3).
    2. Wang, Molin & Yan, Haifeng & Ciabuschi, Francesco & Su, Cong, 2023. "Facilitator or inhibitor? The effect of host-country intellectual property rights protection on China’s technology-driven acquisitions," International Business Review, Elsevier, vol. 32(6).
    3. Das, Gopal & Spence, Mark T. & Agarwal, James, 2021. "Social selling cues: The dynamics of posting numbers viewed and bought on customers' purchase intentions," International Journal of Research in Marketing, Elsevier, vol. 38(4), pages 994-1016.
    4. Link, Sebastian & Peichl, Andreas & Roth, Christopher & Wohlfart, Johannes, 2023. "Information frictions among firms and households," Journal of Monetary Economics, Elsevier, vol. 135(C), pages 99-115.
    5. Mullins, Jeffrey K. & Cronan, Timothy Paul, 2021. "Enterprise systems knowledge, beliefs, and attitude: A model of informed technology acceptance," International Journal of Information Management, Elsevier, vol. 59(C).
    6. Wang, Qiping & Lau, Raymond Yiu Keung & Xie, Haoran, 2021. "The impact of social executives on firms’ mergers and acquisitions strategies: A difference-in-differences analysis," Journal of Business Research, Elsevier, vol. 123(C), pages 343-354.
    7. Guercini, Simone & Milanesi, Matilde, 2020. "Heuristics in international business: A systematic literature review and directions for future research," Journal of International Management, Elsevier, vol. 26(4).
    8. Schriber, Svante & Degischer, Daniel, 2020. "Disentangling acquisition experience: A multilevel analysis and future research agenda," Scandinavian Journal of Management, Elsevier, vol. 36(2).
    9. Gudmundsson, Sveinn Vidar & Merkert, Rico & Redondi, Renato, 2020. "Cost structure effects of horizontal airline mergers and acquisitions," Transport Policy, Elsevier, vol. 99(C), pages 136-144.
    10. Rudolf, Katrin & Romero, Miriam & Asnawi, Rosyani & Irawan, Bambang & Wollni, Meike, 2020. "Effects of information and seedling provision on tree planting and survival in smallholder oil palm plantations," Journal of Environmental Economics and Management, Elsevier, vol. 104(C).
    11. Ma, Qingzhong & Whidbee, David A. & Zhang, Wei, 2019. "Acquirer reference prices and acquisition performance," Journal of Financial Economics, Elsevier, vol. 132(1), pages 175-199.
    12. Gao, Shenghao & Cao, Feng & Fok, Robert (Chi-Wing), 2019. "The anchoring effect of underwriters' proposed price ranges on institutional investors' bid prices in IPO auctions: Evidence from China," International Review of Economics & Finance, Elsevier, vol. 63(C), pages 111-127.
    13. Li, Tongzhe & Fooks, Jacob R. & Messer, Kent D. & Ferraro, Paul J., 2021. "A field experiment to estimate the effects of anchoring and framing on residents’ willingness to purchase water runoff management technologies," Resource and Energy Economics, Elsevier, vol. 63(C).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Božidar Vlačić & Inês G. Almeida Santos & Susana C. Silva & Miguel González-Loureiro, 2022. "Entrepreneurial cognition and internationalization speed: towards a potential moderating effect of experiential and rational information processing," International Entrepreneurship and Management Journal, Springer, vol. 18(2), pages 603-636, June.
    2. Leon Zolotoy & Don O’Sullivan & Keke Song, 2021. "The Role of Ethical Standards in the Relationship Between Religious Social Norms and M&A Announcement Returns," Journal of Business Ethics, Springer, vol. 170(4), pages 721-742, May.
    3. Kim, Hyunjung & Li, Tongzhe, 2024. "Rethinking the Significance of Scientific Information: A Field Experiment with Agricultural Producers," 2024 Annual Meeting, July 28-30, New Orleans, LA 344038, Agricultural and Applied Economics Association.
    4. Fetzer, Thiemo & Yotzov, Ivan, 2023. "(How) Do electoral surprises drive business cycles? Evidence from a new dataset," CAGE Online Working Paper Series 672, Competitive Advantage in the Global Economy (CAGE).
    5. Wehrhöfer, Nils, 2023. "Energy prices and inflation expectations: Evidence from households and firms," Discussion Papers 28/2023, Deutsche Bundesbank.
    6. Emilia Jercan & Teodora Nacu, 2024. "The Role of Management/Manager Practices in the Process of Internationalization of SMEs," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 3, pages 112-127.
    7. Elena-Mădălina Vătămănescu & Andreea Mitan & Paul Claudiu Cotîrleț & Andreia Gabriela Andrei, 2022. "Exploring the Mediating Role of Knowledge Sharing between Informal Business Networks and Organizational Performance: An Insight into SMEs Internationalization in CEE," Sustainability, MDPI, vol. 14(7), pages 1-15, March.
    8. Buchheim, Lukas & Dovern, Jonas & Krolage, Carla & Link, Sebastian, 2022. "Sentiment and firm behavior during the COVID-19 pandemic," Journal of Economic Behavior & Organization, Elsevier, vol. 195(C), pages 186-198.
    9. Link, Sebastian & Peichl, Andreas & Roth, Christopher & Wohlfart, Johannes, 2023. "Attention to the Macroeconomy," CEPR Discussion Papers 18699, C.E.P.R. Discussion Papers.
    10. Li, Fengfei & Lin, Ji-Chai & Lin, Tse-Chun & Shang, Longfei, 2023. "Behavioral bias, distorted stock prices, and stock splits," Journal of Banking & Finance, Elsevier, vol. 154(C).
    11. Janne Tukiainen & Sebastian Blesse & Albrecht Bohne & Leonardo M. Giuffrida & Jan Jäässkeläinen & Ari Luukinen & Antti Sieppi, 2021. "What Are the Priorities of Bureaucrats? Evidence from Conjoint Experiments with Procurement Officials," EconPol Working Paper 63, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    12. Schmidt, Heiko M. & Santamaria-Alvarez, Sandra Milena, 2022. "Routines in International Business: A semi-systematic review of the concept," Journal of International Management, Elsevier, vol. 28(2).
    13. An, Suwei, 2023. "Essays on incentive contracts, M&As, and firm risk," Other publications TiSEM dd97d2f5-1c9d-47c5-ba62-f, Tilburg University, School of Economics and Management.
    14. Dittmar, Amy & Duchin, Ran & Zhang, Shuran, 2020. "The timing and consequences of seasoned equity offerings: A regression discontinuity approach," Journal of Financial Economics, Elsevier, vol. 138(1), pages 254-276.
    15. Michael Weber & Francesco D'Acunto & Yuriy Gorodnichenko & Olivier Coibion, 2022. "The Subjective Inflation Expectations of Households and Firms: Measurement, Determinants, and Implications," Journal of Economic Perspectives, American Economic Association, vol. 36(3), pages 157-184, Summer.
    16. Chun, Wootae & Wang, Zhan & Gon Kim, Hyun, 2024. "Do environmental regulations drive MNEs’ equity ownership? Considering the impact of exogenous shocks on MNEs’ cross-border acquisitions," Journal of Business Research, Elsevier, vol. 174(C).
    17. An, Siyang & Cheung, Chi Fai & Willoughby, Kelvin W., 2024. "A gamification approach for enhancing older adults' technology adoption and knowledge transfer: A case study in mobile payments technology," Technological Forecasting and Social Change, Elsevier, vol. 205(C).
    18. Martha Elena Delgado & Juan Herreño & Marc Hofstetter & Mathieu Pedemonte, 2024. "The Causal Effects of Expected Depreciations," Working Papers 24-07, Federal Reserve Bank of Cleveland.
    19. Wang, Zhen & Chu, Erming, 2024. "The path toward urban carbon neutrality: How does the low-carbon city pilot policy stimulate low-carbon technology?," Economic Analysis and Policy, Elsevier, vol. 82(C), pages 954-975.
    20. Hunt, Richard A. & Song, Yue & Townsend, David M. & Stallkamp, Maximilian, 2021. "Internationalization of entrepreneurial firms: Leveraging real options reasoning through affordable loss logics," Journal of Business Research, Elsevier, vol. 133(C), pages 194-207.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:finlet:v:58:y:2023:i:pc:s1544612323008528. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/frl .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.