Tyler Cowen: belief

Transcript context

…[laughs] You’ve been reading my secret Tumblr. Which I’m not going to link up to. It’s just very Nabokovian. He’s just this great esthete of almost pointless pleasure in writing. There’s this scene that I love where Pnin, the absentminded professor character, is heartbroken after a run-in with his ex-wife. He’s dejectedly walking through the park on the way home, and he’s pondering the meaning of life. Nabokov says something like he’s almost come upon a solution to one of the great mysteries of life. Then he’s interrupted by a squirrel who runs up on a water fountain and demands that he help the squirrel drink from the water fountain. So he helps the squirrel, and then he moves on. It’s just this random interlude of gorgeous writing and bizarre scenery and just random pileup of weird delightfulness with no point that I find very appealing. [laughs] If we think about mergers and acquisitions, one of the standard results in the empirical finance literature is that acquiring firms do fairly poorly. That is, acquisitions don’t seem to pay off. Yet, of course, acquisitions persist. You’ve done M&A work in your life. How do you think about this process? If it doesn’t pay off, is it about empire building? Is it about winner’s curse? Do you somehow not trust the data? You would challenge the interpretation of the result? Or how good are acquisitions for the acquiring firm? And what goes wrong? I wouldn’t challenge the data. It’s a similar story to active management in some ways. The fact that M&A is bad doesn’t mean that your merger will be bad, right?…

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