A merger boom comparable to those of the $1960$s and mid$-1980$s occurred in the $1990$s and into the new millennium. The merger activity of the $1960$s was associated with increasing stock prices and heavy use of pooling of interests accounting. The mid$-1980$s activity was associated with a number of leveraged buyouts and acquisitions involving junk bonds. Merger activity in the early $1990$s$,$ on the other hand, appeared primarily to involve purchases with cash and standard debt instruments. By the mid$-1990$s$,$ however, many business combinations were being accomplished through the exchange of stock.

$1.$Which factors do you believe were the most prominent in encouraging business combinations in the $1990$s$?$ Which of these was most important? Explain why.

$2.$If a major review of the tax laws were undertaken, would it be wise to establish greater tax incentives for corporate mergers? Why? Propose at least one incentive that might be used.

$3.$If the FASB is interested in encouraging more mergers, what action might it take with regard to revising or eliminating current accounting standards?