Do Cognitive Biases Impact M&A Performance in Emerging Markets? Evidence from Russian Firms

Irina Skvortsova () and Anna Vershinina ()
Additional contact information
Irina Skvortsova: National Research University Higher School of Economics
Anna Vershinina: National Research University Higher School of Economics

HSE Working papers from National Research University Higher School of Economics

Abstract: In this paper we investigate cognitive biases as a potential reason for the varied results of M&A in emerging capital markets. We focus on two cognitive biases, CEO overconfidence and availability bias, which significantly influence CEO behavior, encouraging them to be irrational in M&A deals. Based on 237 M&A deals closed by Russian firms during the period 2005–2019 we empirically prove that CEO overconfidence destroys value, and availability bias creates value in M&A deals in the Russian market. We show that due to the low level of corporate governance in emerging capital markets, all corporate governance mechanisms can mitigate CEO irrationalities in M&A.

Keywords: M&A performance; emerging capital markets; cognitive biases; CEO overconfidence; availability bias. (search for similar items in EconPapers)
JEL-codes: G34 G41 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2021
New Economics Papers: this item is included in nep-cfn, nep-cis, nep-cwa and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations:

Published in WP BRP Series: Financial Economics / FE, May 2021, pages - 28

Downloads: (external link)
https://wp.hse.ru/data/2021/05/26/1438204408/82FE2021.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hig:wpaper:82/fe/2021

Access Statistics for this paper

More papers in HSE Working papers from National Research University Higher School of Economics
Bibliographic data for series maintained by Shamil Abdulaev () and Shamil Abdulaev ().