Editing Mergers and acquisitions (section)

===Other types===
On average and across the most commonly studied variables, acquiring firms' financial performance does not positively change as a function of their acquisition activity.<ref>{{cite journal |last=King |first=D. R. |author2=Dalton, D. R. |author3=Daily, C. M. |author4= Covin, J. G. |year=2004 |title=Meta-analyses of Post-acquisition Performance: Indications of Unidentified Moderators |journal=Strategic Management Journal |volume=25 |issue=2 |pages=187–200 |doi=10.1002/smj.371 |s2cid=36682294 |url= https://epublications.marquette.edu/mgmt_fac/99}}</ref> Therefore, additional motives for merger and acquisition that may not add shareholder value include:
* Diversification: While this may hedge a company against a downturn in an individual industry it fails to deliver value, since it is possible for individual shareholders to achieve the same hedge by diversifying their portfolios at a much lower cost than those associated with a merger. (In his book ''One Up on Wall Street'', Peter Lynch termed this "diworseification".)<ref>{{cite journal |last1=Amihud |first1=Yakov |last2=Baruch |first2=Lev |title=Risk Reduction as a Managerial Motive for Conglomerate Mergers |journal=The Bell Journal of Economics |date=1981 |volume=12 |issue=2 |pages=605 |doi=10.2307/3003575 |url=https://www.researchgate.net/publication/24047961|jstor=3003575 }}</ref>
*[[Managerial hubris|Manager's hubris]]: manager's overconfidence about expected synergies from M&A which results in overpayment for the target company.<ref>{{cite journal |last1=Roll |first1=Richard |title=The Hubris Hypothesis of Corporate Takeovers |journal=The Journal of Business |date=1986 |volume=59 |issue=2 |pages=197–216 |jstor=2353017 |doi=10.1086/296325 }}</ref> The effect of manager's overconfidence on M&A has been shown to hold both for CEOs<ref>{{cite journal |last1=Malmendier |first1=Ulrike |last2=Tate |first2=Geoffrey |title=Who makes acquisitions? CEO overconfidence and the market's reaction |journal=[[Journal of Financial Economics]] |date=2008 |volume=89 |issue=1 |pages=20–43 |url=https://econpapers.repec.org/article/eeejfinec/v_3a89_3ay_3a2008_3ai_3a1_3ap_3a20-43.htm|doi=10.1016/j.jfineco.2007.07.002 |s2cid=12354773 }}</ref> and board directors.<ref>{{cite journal |last1=Twardawski |first1=Torsten |last2=Kind |first2=Axel |title=Board overconfidence in mergers and acquisitions |journal=[[Journal of Business Research]] |date=2023 |volume=165 |issue=1 |url=https://www.sciencedirect.com/science/article/pii/S0148296323003843|doi=10.1016/j.jbusres.2023.114026}}</ref>
*Empire-building: Managers have larger companies to manage and hence more power. 
*Manager's compensation: In the past, certain executive management teams had their payout based on the total amount of profit of the company, instead of the profit per share, which would give the team a [[perverse incentive]] to buy companies to increase the total profit while decreasing the profit per share (which hurts the owners of the company, the shareholders).