 The perils of popularity: Retail investor attention and misguided M&AsWeiping Li, Hanfang Zhang and Jingjing Xia Emerging Markets Review, 2025, vol. 68, issue C Abstract: Although the impact of retail investor attention on stock market dynamics has been widely studied, its influence on firm-level strategic decisions, such as mergers and acquisitions (M&As), remains largely unexplored. This study investigates the relationship between retail attention and M&A activity using a sample of Chinese A-share listed firms from 2011 to 2022. We find that heightened retail attention can lead to CEO overconfidence due to the self-attribution bias, which in turn results in increased M&A activity. However, these attention-driven acquisitions often prove to be value-destroying, consistent with evidence in prior research that overconfident CEOs tend to make imprudent investment decisions. Furthermore, the positive association between retail attention and M&A is more pronounced in firms facing higher uncertainty but is attenuated in firms subject to stronger external monitoring. These findings underscore the substantial, yet often overlooked, impact of retail investors on corporate strategic decision-making. Keywords: Retail investor attention; Mergers and acquisitions; CEO overconfidence; Self-attribution bias (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ememar:v:68:y:2025:i:c:s1566014125000846 DOI: 10.1016/j.ememar.2025.101335 Access Statistics for this article Emerging Markets Review is currently edited by Jonathan A. Batten More articles in Emerging Markets Review from Elsevier |
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