Factors motivating mergers: the case of rural electric cooperatives

Matched samples of merged and nonmerged firms were studied to determine factors which contribute to mergers of rural electric cooperatives. Differences between groups were examined by using univariate t-tests and logit analysis. Merged firms showed lower profitability, efficiency, debt service, liquidity and activity during periods prior to the merger. Analysis revealed specific variables which distinguish merged from nonmerged firms. While merged firms had decreased capacities for cost control, nonmerged firms had higher overhead and maintenance costs.