Serial acquirer bidding: An empirical test of the learning hypothesis

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

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Abstract: Recent academic studies indicate that acquirers' cumulative abnormal returns (CAR) decline from deal to deal in acquisition programs. Does this pattern suggest hubristic CEO behaviors are significant enough to influence average CAR patterns during acquisition programs? An alternative explanation is CEO learning. This study therefore tests for learning using successive acquisitions of large U.S. public targets undertaken by U.S. acquirers. A dynamic framework reveals that both rational and hubristic CEOs take on average investor reactions to their previous deals into account and adjust their bidding behavior accordingly. These results are consistent with a learning hypothesis.

Date: 2011-02-01
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Published in Journal of Corporate Finance, 2011, 17 (1), 18-32 p. ⟨10.1016/j.jcorpfin.2010.07.002⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02312633

DOI: 10.1016/j.jcorpfin.2010.07.002

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