The hubris hypothesis suggests that managers continue to engage in acquisitions,
ID: 443732 • Letter: T
Question
The hubris hypothesis suggests that managers continue to engage in acquisitions, even though, on average, they do not generate economic profits, because of the unrealistic belief on the part of these managers that they can manage a target firm’s assets more efficiently than that firm’s current management. This type of systematic nonrationality usually does not last too long in competitive market conditions: Firms led by managers with these unrealistic beliefs change, are acquired, or go bankrupt in the long run. What are the attributes of the market for corporate control that suggest that managerial hubris could exist in this market, despite its performance-reducing implications for bidding firms?
Explanation / Answer
it is not correct the assumptions that the managers can manage the resources of the target firms than thier own firm assets. the one who knows to manage his resources in a well manner, he can manage the others resources also. if he dont know how to utilise his own resources he does not know how to use others resources.
these are wrong perceptions, still there are some people in 21st century who believes in these kind of concepts. but it is completely wrong. the one who correctly manage the resources in the competitive market they are going to be rule the market. otherwise they are no more in the competiton.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.