Board Overconfidence and M&A performance: Evidence from the UK

Brahma, Sanjukta, Boateng, Agyenim and Ahmad, Sardar ORCID: 0000-0002-9745-808X (2023) Board Overconfidence and M&A performance: Evidence from the UK. Review of Quantitative Finance and Accounting, 60 (4). pp. 1363-1391.

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Abstract

<jats:title>Abstract</jats:title><jats:p>This paper investigates the relationship between board overconfidence and mergers and acquisitions (M&amp;A) performance based on 754 M&amp;A deals in the UK from 2002 to 2018. Employing three proxies to measure overconfidence, namely, fraction of male directors on the board, multiple acquisitions and merger characteristics, our results suggest that a higher fraction of male directors on the board and multiple acquisitions lead to poor M&amp;A performance. The results also show that multiple acquirers’ deals generate higher returns than subsequent deals and this is due to self-attribution bias. In terms of merger characteristics, this study has found that, when overconfident acquirers use cash as the method of payment or when they embark on diversifying M&amp;A, it leads to poor M&amp;A performance. The results are robust across both univariate and multivariate analyses and also across alternate measures of post-merger performance. The findings of this study have important policy implication with regard to the ratio of male directors, number of acquisitions and the method of payment.</jats:p>

Item Type:	Article
Uncontrolled Keywords:	Mergers and acquisitions, Overconfidence, Board gender, Acquisitiveness
Divisions:	Faculty of Humanities and Social Sciences > School of Management
Depositing User:	Symplectic Admin
Date Deposited:	16 Jan 2023 10:24
Last Modified:	03 May 2023 17:29
DOI:	10.1007/s11156-023-01133-8
Related URLs:	Author Publisher
URI:	https://livrepository.liverpool.ac.uk/id/eprint/3167042