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An Empirical and Ethical Analysis of Factors Motivating Managers' Merger Decisions

Francis K. Achampong and Wold Zemedkun
Journal of Business Ethics
Vol. 14, No. 10 (Oct., 1995), pp. 855-865
Published by: Springer
Stable URL: http://www.jstor.org/stable/25072706
Page Count: 11
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An Empirical and Ethical Analysis of Factors Motivating Managers' Merger Decisions
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Abstract

This paper examines the role of managerial self-interest in the merger market. It looks at factors influencing managers' merger decisions by analyzing managerial expense preference factors on cross-sectional data employing non-parametric statistical methods. The same factors are examined for acquiring, acquired, and merging firms, and control groups used in each case. The results support the authors' contention that managerial discretion is a significant motivating factor for mergers. The changes in expense preference factors indicate management decisions which provide conditions allowing management to indulge in management preferred expenditures, while reducing risk to their career. The authors then provide a moral/philosophic framework of ethical analysis for examining manager's merger decisions, using teleological and deontological theories. They conclude that merger decisions motivated or influenced by self-interest are unethical and, in the process, provide managers facing a merger decision with a framework for making an ethical decision.

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