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Full-Text Articles in Finance and Financial Management
The Behavior And Choices Of Serial Bidders In M&A Transactions: A Prospect Theory Approach, Ahmed Essam El-Din El-Bakry
The Behavior And Choices Of Serial Bidders In M&A Transactions: A Prospect Theory Approach, Ahmed Essam El-Din El-Bakry
Theses and Dissertations in Business Administration
This paper investigates the impact of previous losses incurred by U.S serial bidders on their M&A strategic choices and premiums paid to acquire targets. The Hubris and Overconfidence theories suggest that managers tend to overpay as a result of exaggerating their ability to extract value and manage post-acquisition integration process between the acquiring firm and its target. Managerial overconfidence, which is signaled by conducting several acquisitions within a short time period or by other manager-specific investment attributes, has been shown to contribute to increasing premiums in M&A transactions and subsequent poor post-acquisition performance.
Experimental findings in the area of psychology …