Acquisition Experience and the Winner’s Curse in Corporate Acquisitions

Marta Arroyabe () and Katrin Hussinger
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Marta Arroyabe: University of Essex, UK

DEM Discussion Paper Series from Department of Economics at the University of Luxembourg

Abstract: The winner’s curse describes the behavioral phenomenon that the winner of a bidding contest pays a price which is too high. This paper shows that experiential learning cannot prevent a winner’s curse on the market of corporate control as acquiring firms with acquisition experience still pay a higher price for the target in a bidding contest. Acquisition experience, however, is related to a superior post-acquisition performance of the winning firm after acquisitions associated with a bidding contest.

Keywords: Firm acquisitions; winner’s curse; bidding contest; acquisition experience; experiential learning. (search for similar items in EconPapers)
JEL-codes: G34 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-bec, nep-cfn and nep-com
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https://hdl.handle.net/10993/55479 (application/pdf)

Related works:
Journal Article: Acquisition experience and the winner’s curse in corporate acquisitions (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:luc:wpaper:23-07

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