Learning or hubris? why CEOs create less value in successive acquisitions

Deskripsi

Contrary to the common belief that hubris or overconfidence drives CEOs to continue making value-destroying acquisitions, the authors present evidence supporting a learning-based explanation. CEOs refine their ability to assess and mitigate risks associated with acquisitions over time. While initial acquisitions may yield lower returns due to overpayment (in the case of overconfident CEOs) or underbidding (in conservative CEOs), both types of CEOs adjust their strategies through experiential learning. The article also examines the implications of this learning process for managerial decision-making, acquisition expertise, and the potential influence of compensation contracts on accelerating learning.