The article The Role of Procedural Rationality in Debiasing Acquisition Decisions of Overconfident CEOs co-authored by Professor Keil with Assistant Professor Stevo Pavicevic (Frankfurt School of Finance and Management) has been accepted for publication in Strategic Management Journal.
This study investigates how firms can improve acquisition decision making. CEOs often exhibit excessively high levels of confidence in their ability to make successful corporate acquisitions. Driven by the belief in their ability, overconfident CEOs often end up overpaying for acquisitions. Our study provides suggestive evidence that setting a slow acquisition process pace is an important prerequisite for an acquiring firm and its board of directors to attenuate the inflating effect of CEO overconfidence on acquisition premiums. Our arguments and results imply that boards of directors should slow the pace of pre-deal acquisition processes if their CEO is exhibiting signs of overconfidence.