The Hubris Hypothesis of Corporate Takeovers Essay

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The Hubris Hypothesis of Corporate Takeovers Author(s): Richard Roll Source: The Journal of Business, Vol. 59, No. 2, Part 1 (Apr., 1986), pp. 197-216 Published by: The University of Chicago Press Stable URL: Accessed: 10/02/2010 10:10
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It is a pleasureto acknowledgethe benefitsderivedfrom the generosity of so many colleagues. They corrected several conceptualand substantiveerrors in the previous draft, directed my attentionto other results, and suggestedother interpretationsof the empiricalphenomena. In general, they provided me with an invaluable tutorial on the subject of corporatetakeovers.The presentdraftundoubtedly constill tainserrorsandomissions,but this is due mainlyto my inability to distill and convey the collective knowledgeof the profession. Among those who helped were C. R. Alexander, Peter Bernstein, Thomas Copeland, Harry DeAngelo, EugeneFama, KarenFarkas,MichaelFirth, MarkGrinblatt, Gregg Jarrell, Bruce Lehmann, Paul Malatesta, Ronald Masulis, David Mayers, John McConnell, Merton Miller, StephenRoss, RichardRuback,SheridanTitman,and, especially, MichaelJensen, KatherineSchipper,WalterA. Smith, Jr., and J. Fred Weston. I also benefitedfrom the comments of the finance workshop participantsat the University of Chicago, the University of Michigan, and DartmouthCollege, and of the referees.
(Journal of Business, 1986, vol. 59, no. 2, pt. 1) ? 1986 by The University of Chicago. All rights reserved. 002 1-9398/86/5902-0001$01.50 197

The hubris hypothesis is advanced as an explanation of corporate takeovers. Hubris on the part of individual

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