1. Merger theories from the Brouthers et al article
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2. What is theory? If X then Y (a hypothesis) Example
Business mergers will lead to better shareholder returns
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3. Theory and practice Theory – if X then Y
Practice – what companies actually do
Applying theory to practice
What does the theory predict?
Does it appear to work in practice?
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4. If most mergers fail, why are they so popular?
Brouthers, K. D., van Hastenburg, P. and van den Ven, J. (1998) ‘If most mergers fail why are they so popular?’, Long Range Planning,Vol 31, No 3, pp
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5. Empirical evidence
Empirical (real world) evidence suggests that for acquiring firms, mergers are not very successful
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6. Theory statements from the Brouthers article
A number of scholars₃ have suggested that this difference between action (the continued pursuit of mergers) and performance (the low rate of ‘successful mergers) may be caused by managers pursuing goals other than shareholder wealth maximization
(theory hypothesis – X may be caused by Y)
Use Harvard, not ‘Oxford’ referencing
3 – e.g., Berkovitch, E. and Narayan, M.P. (1993) ‘Motives for takeovers: an empirical investigation’. Journal of Financial and Quantitative Analysis 23(3) pp
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7. Theory implications from the Brouthers article
If ‘true’, The implications of this would be that empirical research is looking for the wrong things – researchers are using an inaccurate measure of performance
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8. Another theory from the Brouthers article
The apparent low number of ‘successful’ mergers may be due to managers being overly optimistic, thinking that they have learned from past merger mistakes while in fact they are making the same mistakes
(Theory hypothesis – X may be caused by Y)
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9. Applying theory (model) to practice
Brouthers et al (1998) use a multiple motive model to measure merger performance, which recognises that managers may have multiple motives for merger activity. In the case of the acquisition of Home Retail Group plc by Sainsbury plc, it can be seen that………………………………
Compare and contrast what Sainsbury’s actually did (empirical evidence) with the theories in the Brouthers article. Can you see any connections between theory and practice? In what ways? Why?
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10. Evaluating theory
From the Sainsbury’s empirical evidence, can you say that Brouthers et al are ‘right’, or that their theory is a good one in terms of its ‘fit’ with this real world case? Can you see ways in which the merger theories they discuss are not appropriate to the Sainsbury’s case?
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11. Evaluating research
In their research on Dutch merger activity, Brouthers et al (1998) found that the most important merger motive was for economic reasons. However, in the Sainsbury’s case…………. (contrast)
In their research on Dutch merger activity, Brouthers et al (1998) found that the most important merger motive was for economic reasons. Equally, in the Sainsbury’s case…………. (comparison)
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12. The argument sandwich argument counter-argument your own opinion
Conway et al (2005) suggest that how employers, supervisors and managers behave on a day-to-day basis is not determined by a legal contract but by an implicit psychological contract. However, Cullinane et al (2006) maintain that the concept itself is too vague to be useful in its current form, suggesting that individual employees will have individual expectations, rather than a general sense of obligation. Although from the literature, there appears to be a general consensus that the psychological contract deals with implicit reciprocal promises and obligations, there appears to be confusion in the literature over the role of expectations as opposed to obligations.
argument counter-argument your own opinion
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13. Planning from paragraph level is essential for good opinion (argument) structure
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14. Coherent Paragraphs?
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15. Checking and editing your work
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