11.1 OC

Question 1

Relationship Selfattribution and OC

Answer 1

succes is skill. Failure is external factors. Initial succes leads to more acquisition deals

Question 2

Do OC perform - alpha

Answer 2

No. Singles outperform. Short and long term

Question 3

Robustness checks

Answer 3

• Diversifying mergers: diversificating mergers destroys value. OC diversify more. Lower performance. High proportion % that div.
• acquisition char.: same result
• corporate governance: doesnt mitigate OC. Weak CG always underperforms regardless from (ir)rational investors.
• block ownership: shareholders monitor managers has important role but not sufficient to create superior performance.
• > OC have low BO

Question 4

Overconfidence (2)

Answer 4

1. Overest current firm value : doesnt want to pay in stocks but cash - firm is now undervalued
2. Overest synergy gains from merger and underest risk