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  • Journal of Financial and Quantitative Analysis, Volume 48, Issue 1
  • February 2013, pp. 137-164

CEO Overconfidence and International Merger and Acquisition Activity

  • Stephen P. Ferris (a1), Narayanan Jayaraman (a2) and Sanjiv Sabherwal (a3)
  • DOI: http://dx.doi.org/10.1017/S0022109013000069
  • Published online: 04 February 2013
Abstract
Abstract

This study examines the role that chief executive officer (CEO) overconfidence plays in an explanation of international mergers and acquisitions during the period 2000–2006. Using a sample of CEOs of Fortune Global 500 firms over our sample period, we find that CEO overconfidence is related to a number of critical aspects of international merger activity. Overconfidence helps to explain the number of offers made by a CEO, the frequencies of nondiversifying and diversifying acquisitions, and the use of cash to finance a merger deal. Although overconfidence is an international phenomenon, it is most extensively observed in individuals heading firms headquartered in Christian countries that encourage individualism while de-emphasizing long-term orientation in their national cultures.

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Journal of Financial and Quantitative Analysis
  • ISSN: 0022-1090
  • EISSN: 1756-6916
  • URL: /core/journals/journal-of-financial-and-quantitative-analysis
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