Win-Stay, Lose-Shift : A Strategy of Serial Acquirers

Research output: Conference Papers (RGC: 31A, 31B, 32, 33)32_Refereed conference paper (no ISBN/ISSN)peer-review

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Author(s)

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Detail(s)

Original languageEnglish
Publication statusPublished - Jun 2019

Meeting

TitleEuropean Financial Management Association 2019 Annual Meetings
LocationUniversity of Azores
PlacePortugal
CityPonta Delgada
Period26 - 29 June 2019

Abstract

We show that serial acquirers are likely to repeat (avoid) strategies that produced good (bad) outcomes in the past. This behavior cannot be explained by rational learning because serial acquirers with positive (negative) return experiences are more likely to initiate value-destroying (value-enhancing) mergers in terms of both market reaction and operating performance. We also discover that, following successful acquisition, higher institutional ownership mitigates excessive acquisitiveness of serial acquirers; after bad outcomes, financial expertise on corporate boards helps identify value-enhancing deals. Finally, past successes lead to future mergers by increasing managers’ confidence, whereas negative experiences directly curb firms’ acquisitiveness.

Research Area(s)

  • Serial Acquirers, Mergers and Acquisitions, Corporate Governance, Reinforcement Learning, Overconfidence

Bibliographic Note

Research Unit(s) information for this publication is provided by the author(s) concerned.

Citation Format(s)

Win-Stay, Lose-Shift : A Strategy of Serial Acquirers. / Bharath, Sreedhar T.; Cho, DuckKi; Choi, Lyungmae.

2019. Paper presented at European Financial Management Association 2019 Annual Meetings, Ponta Delgada, Portugal.

Research output: Conference Papers (RGC: 31A, 31B, 32, 33)32_Refereed conference paper (no ISBN/ISSN)peer-review