| The conventional opinion is that mergers occur in waves. Generally, researches on the motives of the merger activities fall into two categories: neoclassical theories and behavioral theories. To find out whether there are different motives for within-industry mergers and cross-industry mergers, I tested four hypotheses to explain merger activities (1986-2008) : the External Shock, Q-Theory, Overvaluation and Managerial-Discretion hypothesis. The first two are under neoclassical theory while the other two follows behavioral theory. Through identifying the characteristics of mergers, I find out that evidence of the neoclassical theory is more consistent with within-industry mergers while the overvaluation theory favors cross-industry mergers. Furthermore, after dividing mergers into different business stage, I find out evidence that the motives also change in different economic conditions for both type of mergers. |
