I believe I can fly: how target venture CEO overconfidence affects acquisition completion

David H. Weng () and Yasuhiro Yamakawa ()
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David H. Weng: California State University
Yasuhiro Yamakawa: Babson College

Small Business Economics, 2023, vol. 61, issue 1, No 7, 127-151

Abstract: Abstract This study examines the role of target venture CEO overconfidence in the acquisitions initiated by established firms. We postulate that the more confident a target venture CEO, the greater the difficulty for an acquirer to negotiate and integrate with the target, reducing the likelihood of a completed acquisition. We further contend that this proposed main effect may vary depending on certain contextual factors. Results based on a sample of acquisitions within the U.S. computer industry suggest that target venture CEO overconfidence reduces the likelihood of acquisition completion and that this effect is contingent on crucial boundary conditions.

Keywords: Acquisition completion; Venture CEO overconfidence; Psychological bias; New ventures; Established firms (search for similar items in EconPapers)
JEL-codes: G34 M12 M13 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s11187-022-00679-6

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