À繫¿¬±¸ Á¦ ±Ç È£ (2018³â 5¿ù)
Asian Review of Financial Research, Vol., No..
pp.239~282
pp.239~282
The Blind Power: Power-Driven CEO Overconfidence and M&A Decision Making
Hyoseok (David) Hwang Assistant Professor of Finance in the Rutgers School of Business at Camden, NJ
Hyun-Dong Kim Assistant Professor of International Finance in the Graduate School of International Studies at Sogang University in Seoul 04107, South Korea
Taeyeon Kim PhD student in the college of Business at Korea Advanced Institute of Science and Technology(KAIST) in Seoul 02455, South Korea
The behavioral finance literature attributes failed M&As to CEO overconfidence. We investigate the source of CEO overconfidence that leads to failed M&As. Among various determinants of CEO overconfidence, we propose that power-led CEO overconfidence delivers undesirable consequences in corporate investments. Using CEO-level data, we find that CEO power increases the probability of a CEO being overconfident.We also show that power-driven overconfident CEOs tend to complete more deals regardless of circumstances, do stock acquisitions, and make value-destroying acquisitions, relative to nonoverconfident CEOs. The results suggest that previous studies on M&As by overconfident CEOs are mainly led by power-driven overconfident CEOs.
Hyoseok (David) Hwang
Hyun-Dong Kim
Taeyeon Kim
The behavioral finance literature attributes failed M&As to CEO overconfidence. We investigate the source of CEO overconfidence that leads to failed M&As. Among various determinants of CEO overconfidence, we propose that power-led CEO overconfidence delivers undesirable consequences in corporate investments. Using CEO-level data, we find that CEO power increases the probability of a CEO being overconfident.We also show that power-driven overconfident CEOs tend to complete more deals regardless of circumstances, do stock acquisitions, and make value-destroying acquisitions, relative to nonoverconfident CEOs. The results suggest that previous studies on M&As by overconfident CEOs are mainly led by power-driven overconfident CEOs.
CEO Overconfidence,CEO Power,Mergers and Acquisitions