Corporate serial acquisitions: an empirical test of the learning hypothesis

Recent empirical papers report a declining trend in the cumulative abnormal return (CAR) of acquirers during an M&A program. Does this necessarily imply that acquiring CEOs are infected by hubris and are not learning from previous mistakes? We first confirm the existence of this declining trend on average. However, we find a positive CAR trend for CEOs likely to be infected by hubris, which is significantly different from the negative trend found for CEOs who are more likely to be rational. We also explore the time between successive deals and find empirical evidence to suggest that many CEOs learn substantially during acquisition programs.