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Mergers in the food industries: Trends, motives, and policies
Author(s) -
Connor John M.,
Geithman Frederick E.
Publication year - 1988
Publication title -
agribusiness
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.57
H-Index - 43
eISSN - 1520-6297
pISSN - 0742-4477
DOI - 10.1002/1520-6297(198807)4:4<331::aid-agr2720040404>3.0.co;2-y
Subject(s) - hubris , economics , profit maximization , stock (firearms) , stock market , stock market crash , profit (economics) , microeconomics , market economy , mechanical engineering , paleontology , horse , biology , engineering , history , classics
From 1978 to 1987 the US food‐marketing industries were in the throes of an historic merger wave that greatly eclipsed the previous three merger waves. Neoclassical economics, which assumes profit‐maximization is the motive for mergers, and managerial utility are the two competing explanations for merger behavior. Empirical tests have so far been unable verify the neoclassical paradigm, which leaves managerial hubris as the principal explanation for mergers. The stock market crash of October 1987 together with expected tighter state and federal merger regulations will markedly slow mergers by large corporations.