The _____ hypothesis postulates that top managers typically overestimate their ability to create value from an acquisition,primarily because rising to the top of a corporation has given them an exaggerated sense of their own capabilities.
A)recognition
B)Napoleon
C)Nelson's eye
D)hubris

Question

Quizplus · Accepted Answer

The management of the acquiring firm is often too optimistic about the value that can be created via an acquisition and is thus willing to pay a significant premium over a target firm's market capitalization.This is called the "hubris hypothesis" of why acquisitions fail.The hubris hypothesis postulates that top managers typically overestimate their ability to create value from an acquisition,primarily because rising to the top of a corporation has given them an exaggerated sense of their own capabilities.

The _____ Hypothesis Postulates That Top Managers Typically Overestimate Their