<P>This Article shows how recent behavioral and psychological literature is useful<BR>for understanding merger decision-making by conducting a psychologically-oriented empirical<BR>study that reveals the presence of psychological motivations or factors in mega-merger decisionmaking.<BR>The data set is the 10 largest stock-for-stock mega-mergers for each of the last three<BR>years–the heyday of the mega-mergers. It first situates the Article in an ongoing study of the<BR>mega-merger “wave” and presents the necessary behavioral and psychological background to<BR>the empirical study. It next describes the method of the study, which involves creating a “grid”<BR>of psychological factors and applying it to public representations of decisions by the boards of<BR>the merging firms in the data set, in order to detect the presence of the factors in this decisionmaking.<BR>It then presents the results of the empirical study and offers a narrative explanation of<BR>them. To reinforce the shareholder value destruction in the mega-mergers, the Article also<BR>provides evidence of value loss in the 30 mega-mergers. Finally, it discusses the implications of<BR>the empirical study for corporate and securities law relating to mega-merger decision-making.<BR>Here it finds that courts and policy-makers accept a psychologically simplistic view of this<BR>decision-making by both boards of directors and shareholders. It also argues that both<BR>corporate law and federal securities laws require reform so that regulators and courts can<BR>address the influence of psychological factors in merger decision-making. The Article concludes<BR>by offering examples of possible legal reform. </P>

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