Darryl Laws

 Problem statement.

Aside from the fact that there are significant gaps in the literature currently available addressing irrational human behavior and its impact on decision-making processes during mergers and acquisitions process, there is an plethora of literature written that is focused upon CEO overconfidence and his / her impact upon the company’s board of directors and or “the market’s” reaction to CEO decisions and not upon the various behaviors that have cause and effect upon the economic outcomes in mergers and acquisition transactions. Examples of these articles that I read are; Who Makes Acquisitions? CEO Overconfidence and the Market’s Reaction  (2004) and Behavioral CEO: The Role of Managerial Overconfidence (2015), both papers written by Malmendier and Tate.

Thus, there is a need to extend the topic so that mergers and acquisitions industry practitioners; M&A lawyers, M&A investment bankers, private equity buyout fund managers and corporate CEOs have a better understanding of the causes and potential impacts so that they may employee tactics or strategies to reduce the  relative impacts or to position themselves and their teams to anticipate  particular irrational human behaviors in a mergers and acquisition context so that they countermand the anticipated response and reduces its impact(s).  

Research question # 1. What causes irrational human behavior (hubris, greed, fear and overconfidence)? How do these behaviors impact the decision-making processes during mergers & acquisition transactions?  

Research question # 2. In mergers and acquisitions transactions with potentially significant economic outcomes will private equity buyout fund managers inevitably always seeking the dominant game strategy and pay off? What tactical advantages / disadvantages does this irrational human behavior create for the private equity buyer?

Research question # 3. What game theory applications can be utilized to model and countermand such actions?

Purpose statement. The purpose of this research is to identify theories of what causes irrational human behavior to become personified during a mergers and acquisition transaction context based upon data collected from utilizing the grounded theory approach (Charmaz, 2006); field interviews complimented by the use of a questionnaire in order to collect data and extract theories from interviewees and identify variables (independent, dependent , intervening) and their relationships coupled with information gathered from the respective industry practitioners responses to the questions in face to face interviews; so that statistical inferences may be made using quantitative methods in order that industry practitioners may better understand what tactics or strategies that fellow practitioners believe must be employed during the negotiating process in order to more easily navigate through the process. 

Darryl Laws