Overconfident CEOs are usually too aggressive in acquisitions and wind up overpaying. This research asks whether that’s still the case in acquisition waves, finding that in this setting where speed counts, overconfident CEOs acted earlier and produced stronger returns. Overconfidence was measured by whether CEOs were sitting on in-the-money options without exercising them. You wonder if they were overconfident given they were successful. The answer seems yes, overconfidence was just functional in this context.
Source: https://journals.sagepub.com/doi/abs/10.1177/01492063251397362
