Abstract
During the past two decades, corporate managements have been increasingly Interested in growth through mergers and acquisitions. This external growth trend has been accompanied by the development of several merger strategies and philosophies. As a result, merger literature is frequently concerned with concepts such as price-earnings ratio strategy [13] and merger synergy. Synergy may be operational (e.g., the development of marketing or production economies) and/or financial in nature. Although financial synergy may produce “real” benefits (e.g., a lower cost of capital or increased cash flows), it is the general custom today to associate financial synergy with temporary [8], pecuniary [10], or instantaneous [9] earnings per share benefits.
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