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Managerial Overconfidence in High and Low Valuation Markets and Gains to Acquisitions

Croci, Ettore; Petmezas, Dimitris; Vagenas-Nanos, Evangelos


Ettore Croci

Evangelos Vagenas-Nanos


In this paper we empirically investigate bidders' performance managed by overconfident and non-overconfident managers in high and low market valuation periods. Using a sample of UK acquisitions in the period 1990–2005, we provide evidence that the interaction between market valuation and different behavioral traits of managers is a determinant of bidders' returns. In contrast to overconfident managers, non-overconfident managers conduct value-creative acquisition deals in all valuation periods. In addition, when we control for acquirer and deal characteristics, we find that bidders with non-overconfident managers gain the most in high valuation periods, while firms are better off without overconfident managers in any type of market conditions.


Croci, E., Petmezas, D., & Vagenas-Nanos, E. (2010). Managerial Overconfidence in High and Low Valuation Markets and Gains to Acquisitions. International Review of Financial Analysis, 19(5), 368-378.

Journal Article Type Article
Acceptance Date Jun 29, 2010
Online Publication Date Jul 6, 2010
Publication Date 2010-12
Deposit Date Aug 2, 2020
Journal International Review of Financial Analysis
Print ISSN 1057-5219
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 19
Issue 5
Pages 368-378
Public URL