The blind power: Power-led CEO overconfidence and M&A decision making

被引：26
作者：
Hwang, Hyoseok [1 ]
Kim, Hyun-Dong [2 ]
Kim, Taeyeon [3 ]
机构：
[1] Univ Wisconsin, Coll Business, Eau Claire, WI 54702 USA
[2] Sogang Univ, Grad Sch Int Studies, Seoul 04107, South Korea
[3] Korea Adv Inst Sci & Technol, Coll Business, Seoul 02455, South Korea
来源：
NORTH AMERICAN JOURNAL OF ECONOMICS AND FINANCE | 2020年 / 52卷
关键词：
CEO overconfidence; CEO power; Mergers and acquisitions; Corporate governance; SELF-SERVING BIASES; CORPORATE DIVERSIFICATION; AGENCY COSTS; FIRM; COMPENSATION; ACQUISITIONS; ATTRIBUTION; GOVERNANCE; PERFORMANCE; CONTRACTS;
D O I：
10.1016/j.najef.2019.101141
中图分类号：
F8 [财政、金融];
学科分类号：
0202 ;
摘要：
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-led overconfident CEOs tend to complete more deals regardless of economic circumstances, do stock acquisitions, and make diversifying acquisitions, relative to non-overconfident CEOs. The results suggest that the findings of previous studies on M&As by overconfident CEOs could be driven by power-led overconfident CEOs.
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页数：23
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