Transaction premiums, managerial overconfidence and social responsibility

Abstract: This paper investigates the relationship between transaction premiums paid within M&A and the managerial overconfidence of the acquiring companies. As an additional dimension, the effect of the acquiring firm’s commitment to social responsibility on its overconfidence within an M&A setting is examined. Besides the dyadic relation of deal premiums and managerial overconfidence, the objective is thus also to explore how a premium might be affected by the interaction of the acquirer’s overconfidence and its engagement in promoting the social good.