Abstract The article presents information on author J. Curley's norms for the evaluation of potential merger. s. This paper comments on the methodology, that question the usefulness of his normative propositions and to suggest a superior criterion for the financial evaluation of prospective mergers. The article will be devoted to a step-by-step review of Curley's analysis. It will be argued that Curley's dichotomies between the so-called "short-run" and "long-run real growth effects" of mergers, and between their "real" and "transitory" effects, are invalid and misleading. In the next section, one shall then examine the effect Curley's error can have on the valuation of conglomerate stocks. The criticism registered above is something more than mere pedantry. As this author has argued elsewhere the spectacular rise and subsequent collapse in the market value of the conglomerate giants during the late 1960's can be attributed in no small part to over optimistic projections concerning these companies future earnings growth.
U. E. Reinhardt (Sat,) studied this question.
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