The Impact of Executive Gender and Overconfidence on Corporate Acquisitions

Are female executives less overconfident than their male counterparts? Does this overconfidence explain their acquisition decisions? In this research I analyse 3,441 acquisition, performed by 2,357 executives at 921 firms between 2006 and 2018 in order to answer these questions. Using proven overconfidence measures, I findno conclusive differences between the frequency of overconfidence classification between female and male executives. Furthermore, I find that female executives undertake significantly less acquisitions than males, irrespective of their overconfidence, i.e. both overconfident and rational female executives engage in less acquisitions than male executives. Finally, I find the relation betweenoverconfidence andshort-term market performance around the acquisition-announcement to be significantly positive, which goes against previous empirical research. The results suggest that overconfidence manifests itself differently in female and male executives.