Authors: Kelly M. Leong; Kenneth Leong; Janis K. Zaima
Addresses: University of California - Los Angeles, 1512 Williams Avenue, Belmont, CA 94002, USA ' Menlo College, 1000 El Camino Real, Atherton, CA 94027, USA ' Menlo College, 1000 El Camino Real, Atherton, CA 94027, USA
Abstract: Researchers have put forth several explanations as to why mergers underperform in the short-term horizon as well as over the long-term horizon. This study examines the relationship between consumer confidence and the success of mergers. The results show that high consumer confidence, as measured by the Michigan Consumer Sentiment Index, is statistically significant and negatively related to bidder firm average abnormal returns, providing evidence in support of the performance over-extrapolation hypothesis and the hubris hypothesis.
Keywords: mergers and acquisitions; M&A; consumer confidence index; successful mergers; performance over-extrapolation hypothesis; hubris hypothesis.
International Journal of Financial Services Management, 2013 Vol.6 No.4, pp.321 - 333
Received: 14 Oct 2013
Accepted: 03 Nov 2013
Published online: 02 Mar 2014 *