The performance of white-knight management

We ask if a "white-knight" manager's decision to overbid for a target firm is part of a pattern of "bad" investment decisions. We find, on average, that it is part of a pattern, and that white-knight managers make less efficient decisions than do hostile bidders. We also ask if a highly visible, value-decreasing takeover bid spurs shareholders to replace the inefficient management teams. We find that generally they do not. However, the CEOs who lose or leave their jobs are those who make the biggest acquisition mistakes and lose the most value for their shareholders.