Introduction

Abstract

Previous research into the field of takeovers and mergers, with several notable exceptions, has suffered both from the lack of an appropriate theoretical structure and consequently, as I shall argue below, misplaced emphasis, as well as weak statistical methodology which has caused many misleading and often incorrect conclusions to be drawn. It is only recently that researchers have attempted to examine takeovers as an aspect of firm behaviour whereas previously they were regarded primarily in the light of the workings of the market mechanism. The emphasis placed upon market pressures as an explanation of takeovers tended, at least in part, to ignore the firm’s role in takeover activity. Furthermore, the empirical examination of this activity has consequently been concentrated on its effects at the industry level rather than its causes at the firm level; also, the analysis generally has been insufficient to demonstrate what has occurred, or, what would be more important, why it has occurred.