This paper analyzes the rhetoric of financial economists participating in a conference on hostile takeovers with the objective of understanding the practice of science in economics. The particular goal of this analysis is to evaluate whether the conversation is a “good conversation” (McCloskey, 1985). Philosophical rules derived from the logic on inquiry tradition fail at determining which hypotheses are “true” and which research programs are promising. We propose rhetorical analysis of how scientific conversation works in a discipline, a rhetoric of inquiry approach, as a yardstick for evaluation. The basic criterion for progress in a discipline is incorporation of transformative criticism (Longino, 1990).

We study the role of rhetoric in scientific practice through detailed examination of the conversation at a conference on hostile takeovers. Conversational rules suppress discussion of theoretical and methodological issues by all but a small elite group. The “master motive” of the Market metaphor is used to shield phenomena, such as the efficiency of the capital markets and the nature of the market for corporate control, from rational consideration. A number of argumentative devices are used to deflect, rather than consider, criticism. These conversational problems lessen the chance that financial economics can be affected by transformative criticism. Recognition of the seriousness of problems in the scientific conversation is the first step toward freeing the discipline of finance from the limitations of a dysfunctional scientific conversation.