The Theory of Financial Leverage and Conglomerate Mergers.

The author discusses the need to create a new accounting and economic theory to explain and predict the mergers of businesses into conglomerate corporations the U.S. In 1966, 70 per cent of all sizable mergers were conglomerate, compared to the 20 percent ten years prior. Instead of the existing monopoly theory, the author suggests building upon the portfolio theory created by William F. Sharpe which is based on a theory of market equilibrium under conditions of risk.