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Title: Economic theory and merger behaviour
Author: Cleasby, Maurice Edgar
Awarding Body: University of Sheffield
Current Institution: University of Sheffield
Date of Award: 1983
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The purpose of the thesis was to seek a general explanation of merger activity. Methodology: A multitude of explanatory theories existed and it was deemed necessary to determine explicitly the criterion to be used in developing a general theory of mergers. An analysis of major categories of merger theory indicated that the analysis of motive is essential to the provision of an adequate explanation. The theory of the managerial firm was chosen for analysis since it is both logically prior to market explanations and richer in motivational possibilities. Difficulties in testing a theory had been exposed by "growth of knowledge" methodologists. It was decided to utilise the propositions for theory testing and development proposed by Lakatos. Two samples of firms were drawn: quoted companies engaged in the supply of consumer goods from 1970 to 1978, and 100 firms engaged in merger activity in 1978 or 1979 and a control group of 50 firms not involved in mergers. Univariate statistical analysis, multiple regression and discriminant analysis were then involved in determining the financial and structural characteristics of firms with respect to merger behaviour. Findings The claim by Lakatos that knowledge could be advanced in a rational and progressive manner was not substantiated. The view that growth and profit are opposing aims of the managerial firm was rejected. Takeover victims could not be identified with failing firms. Shareholders do not benefit from increasing growth and profits proportionately. The theory of the managerial firm (distinguished from that found in the literature) receives some support. Shareholders seem more concerned with security than is compatible with wealth maximisation theory. Merger activity is best understood as a normal form of investment activity. The development of merger theory requires further analysis of the growth strategies of firms in oligopolistic markets under uncertainty.
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID:  DOI: Not available