Acquisition experience and the winner’s curse in corporate acquisitions

Marta Arroyabe and Katrin Hussinger

Applied Economics, 2024, vol. 56, issue 27, 3247-3261

Abstract: The winner’s curse describes the behavioural phenomenon that the winner of a bidding contest pays a price that 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.

Date: 2024
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Working Paper: Acquisition Experience and the Winner’s Curse in Corporate Acquisitions (2023)
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DOI: 10.1080/00036846.2023.2206108

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