Shu, Pei GiPei GiShuYeh, Yin HuaYin HuaYehSHEAN-BII CHIUWang, Li HuiLi HuiWang2019-07-232019-07-232013-09-0102190915https://scholars.lib.ntu.edu.tw/handle/123456789/414553We create a novel measure of market-nurtured optimism in that managers become more optimistic if the market had responded more favorably, and to a larger extent to positive earnings surprises, than to negative earnings surprises. These market-nurtured managers are prone to engage in value-destructive mergers. The inclination is further reinforced by abundant internal cash. In contrast, a good governance structure mitigates the odds of engaging in mergers and the detrimental effect associated with mergers. The acquisitions launched by overconfident managers are associated with lower market value. © 2013 World Scientific Publishing co.and Center for Pacific Basin Business, Economics and Finance Research.corporate governance | mergers | Overconfidencecorporate governance; mergers; Overconfidence[SDGs]SDG16corporate strategy; governance approach; merger; optimizationjournal articlehttps://api.elsevier.com/content/abstract/scopus_id/8488488130010.1142/S02190915135002152-s2.0-84884881300https://api.elsevier.com/content/abstract/scopus_id/84884881300