As anyone who reads business headlines can attest, the comeback in merger and acquisition activity that began last fall is continuing to surge ahead in 2004. This M&A uptick has led some scholars to accuse acquisition-hungry executives of being empire builders, interested mainly in benefiting themselves rather than their shareholders. But a recent research paper co-authored by Wharton finance professor Geoffrey Tate suggests that overconfidence, not greed, is what can lead some CEOs to overestimate the synergies between their company and a potential target.
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