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Corporate serial acquisitions: An empirical test of the learning hypothesis

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  • AKTAS, Nihat

    (Université catholique de Louvain (UCL). Center for Operations Research and Econometrics (CORE))

  • DE BODT, Eric

    (Université catholique de Louvain (UCL). Center for Operations Research and Econometrics (CORE))

  • ROLL, Richard

Abstract

Recent empirical papers report a declining trend in the cumulative abnormal return (CAR) of acquirers during an M&A program. Does this necessarily imply that acquiring CEOs are infected by hubris and are not learning from previous mistakes? We first confirm the existence of this declining trend on average. However, we find a positive CAR trend for CEOs likely to be infected by hubris, which is significantly different from the negative trend found for CEOs who are more likely to be rational. We also explore the time between successive deals and find empirical evidence to suggest that many CEOs learn substantially during acquisition programs.

Suggested Citation

  • AKTAS, Nihat & DE BODT, Eric & ROLL, Richard, 2007. "Corporate serial acquisitions: An empirical test of the learning hypothesis," LIDAM Discussion Papers CORE 2007023, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvco:2007023
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    File URL: https://sites.uclouvain.be/core/publications/coredp/coredp2007.html
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    Cited by:

    1. Chune Young Chung & Changhwan Choi & Amirhossein Fard, 2024. "Self‐serving attribution and managerial investment decision," Bulletin of Economic Research, Wiley Blackwell, vol. 76(3), pages 749-772, July.
    2. Evbaziegbere ISIBOR (Ph.D) & Joel OBAYAGBONA (Ph.D), 2024. "Managerial Irrationality and Dividend Policy of Non-Financial Firms in Nigeria," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(7), pages 1360-1373, July.
    3. Choi, Paul Moon Sub & Chung, Chune Young & Liu, Chang, 2018. "Self-attribution of overconfident CEOs and asymmetric investment-cash flow sensitivity," The North American Journal of Economics and Finance, Elsevier, vol. 46(C), pages 1-14.
    4. Al Rahahleh, Naseem & Wei, Peihwang Philip, 2012. "The performance of frequent acquirers: Evidence from emerging markets," Global Finance Journal, Elsevier, vol. 23(1), pages 16-33.

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