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Published December 2009 | public
Journal Article

Learning, hubris and corporate serial acquisitions


Recent empirical research has shown that, from deal to deal, serial acquirers' cumulative abnormal returns (CAR) are declining. This has been most often attributed to CEOs hubris. We question this interpretation. Our theoretical analysis shows that (i) a declining CAR from deal to deal is not sufficient to reveal the presence of hubris, (ii) if CEOs are learning, economically motivated and rational, a declining CAR from deal to deal should be observed, (iii) predictions can be derived about the impact of learning and hubris on the time between successive deals and, finally, (iv) predictions about the CAR and about the time between successive deal trends lead to testable empirical hypotheses.

Additional Information

© 2009 Elsevier B.V. Received 12 September 2008, Revised 29 January 2009, Accepted 29 January 2009, Available online 6 February 2009. We thank Sandra Betton, Michael Brennan, Estelle Cantillon, B. Espen Eckbo, Bertrand Jacquillat, Michel Levasseur, Frédéric Lobez, Jeffry Netter (the editor), John Talbott, Karin Thorburn, Walter Torous, Rebecca Zarutskie, an anonymous referee, participants of the Northern Finance Association 2005 conference and the European Finance Association 2007 conference for the numerous suggestions, insights and constructive comments. Part of this research was done while Aktas was at the Université catholique de Louvain (IAG-Louvain School of Management and CORE).

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