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Acquisition experience and the winner’s curse in corporate acquisitions

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  • Marta Arroyabe
  • Katrin Hussinger

Abstract

The winner’s curse describes the behavioural phenomenon that the winner of a bidding contest pays a price that is too high. This paper shows that experiential learning cannot prevent a winner’s curse on the market of corporate control as acquiring firms with acquisition experience still pay a higher price for the target in a bidding contest. Acquisition experience, however, is related to a superior post-acquisition performance of the winning firm after acquisitions associated with a bidding contest.

Suggested Citation

  • Marta Arroyabe & Katrin Hussinger, 2024. "Acquisition experience and the winner’s curse in corporate acquisitions," Applied Economics, Taylor & Francis Journals, vol. 56(27), pages 3247-3261, June.
    • Handle: RePEc:taf:applec:v:56:y:2024:i:27:p:3247-3261
    DOI: 10.1080/00036846.2023.2206108
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    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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