Abstract From the behavioral corporation finance viewpoint,this paper studies the relationship between the manager’s overconfidence in Chinese listed company and acquisitions with empirical analysis on sample of listed companies in Shanghai Stock Exchange between 2003 and 2006. The conclusion is that the manager’s overconfidence is strongly positive relativity with acquisitions, that is overconfident managers will drive acquisitions, thus, the manager’s overconfidence should be an important part of theory intended to explain the causes of merger activity.
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Received: 05 July 2007
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