Corporate Serial Acquisitions: An Empirical Test of the Learning Hypothesis

Aktas, Nihat; de Bodt, Eric; Roll, Richard

doi:10.2139/ssrn.885507

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Corporate Serial Acquisitions: An Empirical Test of the Learning Hypothesis

50 Pages Posted: 22 Feb 2006 Last revised: 21 Feb 2008

See all articles by Nihat Aktas

Nihat Aktas

WHU - Otto Beisheim School of Management

Richard Roll

California Institute of Technology

There are 2 versions of this paper

Date Written: August 31, 2007

Abstract

Recent empirical papers report a declining trend in the cumulative abnormal return (CAR) of acquirers during an M&A program. Does this necessarily imply that acquiring CEOs are infected by hubris and are not learning from previous mistakes? We first confirm the existence of this declining trend on average. However, we find a positive CAR trend for CEOs likely to be infected by hubris, which is significantly different from the negative trend found for CEOs who are more likely to be rational. We also explore the time between successive deals and find empirical evidence to suggest that many CEOs learn substantially during acquisition programs.

Keywords: Learning, Hubris, CAR, M&A program, merger, acquisition

JEL Classification: G34

Suggested Citation: Suggested Citation

Aktas, Nihat and de Bodt, Eric and Roll, Richard W., Corporate Serial Acquisitions: An Empirical Test of the Learning Hypothesis (August 31, 2007). Available at SSRN: https://ssrn.com/abstract=885507 or http://dx.doi.org/10.2139/ssrn.885507