Manager Overconfidence, Overseas Acquisition and Economic Consequences: A Case Study of Yanzhou Coal Mining Co., Ltd.

Abstract

Abstract:

In recent years, overseas acquisition has become an important way for many Chinese companies to implement the "Go Global" strategy. Yet most of the acquisitions didn't achieve their expected benefits. By selecting Yanzhou Coal as the research subject, this pa-per thoroughly studies the acquisition process, payment method and economic consequences of Yanzhou Coal based on the manager over-confidence theory. It is found that overconfident managers are more likely to propose overseas acquisition and prefer cash payments and debt financing. However, such acquisitions did not improve the performance of Yanzhou Coal, and instead brought negative wealth effect to the company. The conclusion of the paper extends the research area of the manager overconfidence theory on overseas acquisition in e-merging markets. In addition, in the background of the "One Belt and One Road", Chinese companies that are about to implement over-seas acquisition can use the result of this study to guard against blind optimism and overconfidence.

Key words: manager overconfidence, overseas acquisition, economic consequences

Deng Lu, Xu Ruiyang, Gu Yu, Liao Mingqing. Manager Overconfidence, Overseas Acquisition and Economic Consequences: A Case Study of Yanzhou Coal Mining Co., Ltd.[J]. , 2016, 28(11): 252-263.

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