Learning, hubris and corporate serial acquisitions

Nihat Aktas, Eric de Bodt and Richard Roll
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Nihat Aktas: EM - EMLyon Business School
Eric de Bodt: Université de Lille
Richard Roll: UCLA Anderson School of Management

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Abstract: Recent empirical research has shown that, from deal to deal, serial acquirers' cumulative abnormal returns (CAR) are declining. This has been most often attributed to CEOs hubris. We question this interpretation. Our theoretical analysis shows that (i) a declining CAR from deal to deal is not sufficient to reveal the presence of hubris, (ii) if CEOs are learning, economically motivated and rational, a declining CAR from deal to deal should be observed, (iii) predictions can be derived about the impact of learning and hubris on the time between successive deals and, finally, (iv) predictions about the CAR and about the time between successive deal trends lead to testable empirical hypotheses.

Date: 2009-12-01
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Citations: View citations in EconPapers (42)

Published in Journal of Corporate Finance, 2009, 15 (5), 543-561 p. ⟨10.1016/j.jcorpfin.2009.01.006⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02311877

DOI: 10.1016/j.jcorpfin.2009.01.006

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