Managerial hubris is the unrealistic belief held by managers in bidding firms that they can manage the assets of a target firm more efficiently than the target firm's current management.
Managerial hubris is one reason a manager may choose to invest in a
merger
Mergers and acquisitions (M&A) are business transactions in which the ownership of companies, other business organizations, or their operating units are transferred to or consolidated with another company or business organization. As an aspect ...
that on average generates no
profit
Profit may refer to:
Business and law
* Profit (accounting), the difference between the purchase price and the costs of bringing to market
* Profit (economics), normal profit and economic profit
* Profit (real property)
A profit (short for ...
s.
[{{cite book, title=Strategic Management and Competitive Advantages, author=Jay B. Barney and William S. Hesterly, page]
380
publisher=Pearson Prentice Hall, date=2008, isbn=0-13-613520-X, url=https://archive.org/details/strategicmanagem0000barn/page/380
See also
*
Leveraged buyout
A leveraged buyout (LBO) is one company's acquisition of another company using a significant amount of borrowed money ( leverage) to meet the cost of acquisition. The assets of the company being acquired are often used as collateral for the loa ...
References
Management
Mergers and acquisitions