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  Overconfidence of CEOs in regards to M&As
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 Ophav:
Kierulff, Nina Simone1, Forfatter
Øvlisen, Frederik 2, Vejleder
Tilknytninger:
1Det Samfundsvidenskabelige Fakultet, Københavns Universitet, København, Danmark, diskurs:7001              
2Økonomisk Institut, Det Samfundsvidenskabelige Fakultet, Københavns Universitet, København, Danmark, diskurs:7014              
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Indhold

Ukontrollerede emneord: Overconfidence, experiment, M&A, feedback,
 Abstract: The purpose of this thesis is to examine the effect of managements’ overconfidence on the number and volume of mergers and acquisitions (M&As). The theory of overconfidence is discussed to see if this could explain the initiation of the M&As. The analysis is performed via a laboratory experiment programmed in zTree and is conducted at the Department of Economics at the University of Copenhagen, designed and programmed by the author of this thesis. The aim of the experiment is essentially to find out if overconfident subjects make different strategic choices than non-overconfident subjects accompanied by the influence of having received feedback in earlier stages. The test of the hypotheses found that there is no significant difference between the overconfidence level of the CEOs who performed M&As and those who did not. Neither is a significant difference found between the level of overconfidence of the CEO and the riskiness of the company they choose to acquire. Build on the interest of incentives the final two hypotheses examine the effect of feedback. But no significant difference is found in the outcome of the main treatment and the outcome of the control treatment, where the presence of feedback was believed to have an effect. Neither is there an effect in the main treatment when looking a positive versus negative feedback.
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Master thesis.pdf (Hovedtekst)
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Tilgængelighed:
Offentlig
Mime-type / størrelse:
application/pdf / 2MB
Copyright dato:
2013-04-05
Copyright information:
De fulde rettigheder til dette materiale tilhører forfatteren.
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Basal

Bogmærk denne post: https://diskurs.kb.dk/item/diskurs:44882:1
 Type: Speciale
Alternativ titel: - An experimental approach
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Detaljer

Sprog: English - eng
 Datoer: 2012-11-09
 Sider: -
 Publiceringsinfo: København : Københavns Universitet
 Indholdsfortegnelse: 1 Introduction . 5
1.1 Research question 6
1.2 Limitations 7
1.3 Literature 8
1.4 Why an experimental approach is chosen 9
2 Theory . 12
2.1 Overconfidence . 12
2.2 Mergers and acquisitions 14
2.3 Executive compensation . 16
2.4 Bonuses for completion of M&A . 17
2.5 Risk aversion . 18
2.6 Performance Feedback 20
2.7 Framing . 21
3 Experimental design . 22
3.1 Treatment without feedback . 23
3.1.1 Part 1 – Measure of overconfidence . 23
3.1.2 Part 2 – The strategic choice . 28
3.2 Treatment with feedback 31
4 Hypotheses 33
5 Empirical method . 35
5.1 Validity 35
5.2 Nonparametric versus parametric methods . 38
5.3 Significance and errors 39
5.4 Statistical Test . 40
6 Descriptive statistics . 43
6.1 Data on the questionnaire 43
6.2 Data on decision making . 47
7 Results . 51
7.1 Test of hypotheses . 51
7.1.1 Ranksum on average overconfidence measure . 52
7.1.2 Ranksum on correct number of answers in questionnaire of general
knowledge 54
7.2 General results 57
8 Discussion 67
9 Conclusion . 75
10 References . 77
11 Appendices 81
Appendix A - Handout at Experiment on Mergers and Acquisitions (M&A) 81
Appendix B – General knowledge questions . 84
Appendix C – Logical test questions . 85
Appendix D - The Kendall Partial correlation coefficient . 86
Appendix E – zTree Experiment program (CD)
 Note: -
 Type: Speciale
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