Working Paper Series,
Research Institute of Industrial Economics

Abstract: This paper studies the relative importance of tax incentives as merger motives in the Swedish industry during the period 1983-1987. Several econometric models are estimated and statistical tests performed. The tax-hypothesis is contrasted with an alternative hypothesis, suggested by Jensen, which explains mergers as a way for independent managers to increase their personal power. Neither hypothesis get any strong support in this study, the evidence is somewhat stronger in favor of Jensen's theory however.

Keywords: Tax incentives; merger motives; manager independence

JEL-codes: G34; M54

24 pages, December 1989

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