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Serial acquirer bidding: An empirical test of the learning hypothesis

Aktas, Nihat and de Bodt, Eric and Roll, Richard (2011) Serial acquirer bidding: An empirical test of the learning hypothesis. Journal of Corporate Finance, 17 (1). pp. 18-32. ISSN 0929-1199.

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Recent academic studies indicate that acquirers' cumulative abnormal returns (CAR) decline from deal to deal in acquisition programs. Does this pattern suggest hubristic CEO behaviors are significant enough to influence average CAR patterns during acquisition programs? An alternative explanation is CEO learning. This study therefore tests for learning using successive acquisitions of large U.S. public targets undertaken by U.S. acquirers. A dynamic framework reveals that both rational and hubristic CEOs take on average investor reactions to their previous deals into account and adjust their bidding behavior accordingly. These results are consistent with a learning hypothesis.

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Additional Information:© 2010 Elsevier B.V. Received 10 February 2009, Revised 13 July 2010, Accepted 14 July 2010, Available online 22 July 2010. We are grateful to Jeffry Netter, an anonymous associate editor, and an anonymous referee for their constructive comments. We thank Luc Bauwens, Sandra Betton, Michael Brennan, Estelle Cantillon, Edith Ginglinger, Robert S. Hansen, Nancy Huyghebaert, Bertrand Jacquillat, Tanguy de Launois, Michel Levasseur, Frédéric Lobez, William L. Megginson, Christophe Perignon, Armin Schwienbacher, Evangelos Sekeris, Jean-Christophe Statnik, John Talbott, Walter Torous, Burcin Yurtoglu, and Rebecca Zarutskie, as well as participants at the NFA 2005 conference (Vancouver), the Hasselt 2006 Corporate Finance Day, the EFA 2007 conference (Ljubljana), the AFFI Paris Finance International 2009 meeting, the CORE Econometric seminar, the Dauphine CEREG seminar, the EMLYON Finance seminar, the ESC Lille Finance seminar, and the K.U.Leuven M&A workshop for suggestions and insights. The second author acknowledges the financial support from the University of Lille 2 (Finance, Banking and Accounting Department) and SKEMA Business School.
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University of LilleUNSPECIFIED
Subject Keywords:Acquisition program; Learning; Hubris; Bid premium
Issue or Number:1
Record Number:CaltechAUTHORS:20190501-083835069
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Official Citation:Nihat Aktas, Eric de Bodt, Richard Roll, Serial acquirer bidding: An empirical test of the learning hypothesis, Journal of Corporate Finance, Volume 17, Issue 1, 2011, Pages 18-32, ISSN 0929-1199, (
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:95124
Deposited By: Tony Diaz
Deposited On:01 May 2019 18:40
Last Modified:03 Oct 2019 21:10

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