Balancing the equation : the joint effects of acquiring and target CEOs’ hubris on acquisition outcomes

Scholars have consistently identified CEO hubris as a significant factor in acquisitions because they influence deal likelihood and shareholder returns, for example. However, little attention has been devoted to target-CEO hubris as researchers have focused predominantly on acquiring CEOs. Research shows that target CEOs play important roles in acquisition outcomes. Given this, a more complete understanding of the role of executive hubris in acquisitions requires considering both acquiring and target sides. To address this, this dissertation investigates the joint effects of acquiring and target CEOs’ hubris in acquisitions. Using a sample of 422 acquisition deals between US-based public firms from 2010 to 2020, I find that, contrary to received wisdom, acquirer-CEO hubris has a positive association with acquisition deal completion only when target-CEO hubris is low. When target-CEO hubris is high, the relationship between acquirer-CEO hubris and acquisition deal completion becomes negative. Moreover, I find that, in acquisitions in which a target CEO remains, acquirer-CEO hubris is less likely to have a negative association with shareholder returns when target-CEO hubris is high. These findings have important implications for research on hubris and acquisitions and related areas. I discuss these and offer suggestions for new theoretical and empirical directions.