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CEO Characteristics Enhancing the Impact of CEO Overconfidence on Firm Value After Mergers and Acquisitions — A Case Study in China

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  • Chia-Hsien Tang

    (College of Accounting and Auditing, Guangxi University of Finance and Economics, 100 Mingxiu Road, Nanning, Guangxi, P. R. China 530003, P. R. China)

  • Yen-Hsien Lee

    (Department of Finance, Chung Yuan Christian University, 200 Chung Pei Road, Chung Li District, Taoyuan City, Taiwan 32023, R.O.C.)

  • Ming-Chih Lee

    (Department of Banking&Finance, Tamkang University, Taiwan)

  • Ya-Ling Huang

    (Department of Golden-Ager Industry Management, Chaoyang University of Technology, Taiwan)

Abstract

This study aims to explore whether various characteristics of chief executive officers (CEO) enhance the impact of CEO overconfidence on a firm’s value after mergers and acquisitions. The study finds that overconfident CEOs have a positive impact on firm value after mergers and acquisitions. The study also shows that overconfidence amongst CEOs can help to explain merger and acquisition decisions and the likelihood of pursuing acquisitions. Young CEOs were also found to significantly increase the impact of CEO overconfidence on a firm’s value after mergers and acquisitions, while female CEOs were found to be more risk averse when compared to their male peers, with lower leverage and less volatility in their firms when compared to firms run by male CEOs.

Suggested Citation

  • Chia-Hsien Tang & Yen-Hsien Lee & Ming-Chih Lee & Ya-Ling Huang, 2020. "CEO Characteristics Enhancing the Impact of CEO Overconfidence on Firm Value After Mergers and Acquisitions — A Case Study in China," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 23(01), pages 1-19, March.
    • Handle: RePEc:wsi:rpbfmp:v:23:y:2020:i:01:n:s0219091520500034
    DOI: 10.1142/S0219091520500034
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    2. Tai-Yuen Hon & Massoud Moslehpour & Kai-Yin Woo, 2021. "Review on Behavioral Finance with Empirical Evidence," Advances in Decision Sciences, Asia University, Taiwan, vol. 25(4), pages 15-41, December.
    3. Killins, Robert & Ngo, Thanh & Wang, Hongxia, 2021. "Goodwill impairment and CEO overconfidence," Journal of Behavioral and Experimental Finance, Elsevier, vol. 29(C).

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