IDEAS home Printed from https://ideas.repec.org/a/ids/injbaf/v12y2021i3p266-284.html
   My bibliography  Save this article

Does CEO overconfidence matter for shareholders' wealth? Evidence from the UK takeover market

Author

Listed:
  • Chen Huang

Abstract

This study examines how CEO overconfidence affects shareholders' wealth (e.g., stock returns) in mergers and acquisitions (M%As). The main measure adopted to link CEO overconfidence is based on whether a CEO holds stock options until the year before the expiration date. Using a sample of M%As in the UK, we document that acquiring firms' stock returns are negatively affected around the announcement date if their CEOs are characterised by overconfidence. The results hold after addressing omitted variable concerns and using a propensity score matching (PSM) analysis. The findings are also robust to the implementation of the alternative measure of managerial overconfidence, such as media portrayal of CEOs. This study offers an important implication for firms to mitigate CEO overconfidence in order to protect the interests of shareholders.

Suggested Citation

  • Chen Huang, 2021. "Does CEO overconfidence matter for shareholders' wealth? Evidence from the UK takeover market," International Journal of Banking, Accounting and Finance, Inderscience Enterprises Ltd, vol. 12(3), pages 266-284.
    • Handle: RePEc:ids:injbaf:v:12:y:2021:i:3:p:266-284
    as

    Download full text from publisher

    File URL: http://www.inderscience.com/link.php?id=116221
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

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

    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:ids:injbaf:v:12:y:2021:i:3:p:266-284. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: Sarah Parker (email available below). General contact details of provider: http://www.inderscience.com/browse/index.php?journalID=277 .

    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.