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Learning, hubris and corporate serial acquisitions

Author

Listed:
  • Nihat Aktas

    (EM - EMLyon Business School)

  • Eric de Bodt

    (Université de Lille)

  • Richard Roll

    (UCLA Anderson School of Management)

Abstract

Recent empirical research has shown that, from deal to deal, serial acquirers' cumulative abnormal returns (CAR) are declining. This has been most often attributed to CEOs hubris. We question this interpretation. Our theoretical analysis shows that (i) a declining CAR from deal to deal is not sufficient to reveal the presence of hubris, (ii) if CEOs are learning, economically motivated and rational, a declining CAR from deal to deal should be observed, (iii) predictions can be derived about the impact of learning and hubris on the time between successive deals and, finally, (iv) predictions about the CAR and about the time between successive deal trends lead to testable empirical hypotheses.

Suggested Citation

  • Nihat Aktas & Eric de Bodt & Richard Roll, 2009. "Learning, hubris and corporate serial acquisitions," Post-Print hal-02311877, HAL.
    • Handle: RePEc:hal:journl:hal-02311877
    DOI: 10.1016/j.jcorpfin.2009.01.006
    as

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