Does CEO overconfidence matter for shareholders' wealth? Evidence from the UK takeover market
by Chen Huang
International Journal of Banking, Accounting and Finance (IJBAAF), Vol. 12, No. 3, 2021

Abstract: This study examines how CEO overconfidence affects shareholders' wealth (e.g., stock returns) in mergers and acquisitions (M&As). The main measure adopted to link CEO overconfidence is based on whether a CEO holds stock options until the year before the expiration date. Using a sample of M&As in the UK, we document that acquiring firms' stock returns are negatively affected around the announcement date if their CEOs are characterised by overconfidence. The results hold after addressing omitted variable concerns and using a propensity score matching (PSM) analysis. The findings are also robust to the implementation of the alternative measure of managerial overconfidence, such as media portrayal of CEOs. This study offers an important implication for firms to mitigate CEO overconfidence in order to protect the interests of shareholders.

Online publication date: Tue, 13-Jul-2021

The full text of this article is only available to individual subscribers or to users at subscribing institutions.

 
Existing subscribers:
Go to Inderscience Online Journals to access the Full Text of this article.

Pay per view:
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.

Complimentary Subscribers, Editors or Members of the Editorial Board of the International Journal of Banking, Accounting and Finance (IJBAAF):
Login with your Inderscience username and password:

    Username:        Password:         

Forgotten your password?


Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.

If you still need assistance, please email subs@inderscience.com