Question4) Listen>The Reading states that in a takeover bid, management is permitted to take defensive action provided theiractions do not have long term detrimental effects on the company itself.TrueFalse

The question is related to the effects on the company in case of a takeover Bid. Generally, the…

Answered: The Reading states that in a takeover…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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A director’s duty to avoid a conflict of interest includes:Select one:a. Not making a personal profit from an opportunity arising from their officeb. Not taking up an opportunity that belongs to the companyc. Not using his or her position for private gaind. All of the above
• Which of the following is incorrect? O Straight line amortization of goodwill is simpler than goodwill impairment testing. Straight line amortization is considered by many to provide little if any useful information to readers of financial statements. Straight line amortization can only be used under U.S. GAAP when impairment testing is impossible. Goodwill impairment testing provides companies with more opportunities to engage in earnings management than does straight line amortization.
In case of a firm facing an unfriendly merger, offer might arrange to be acquired by a different, friendly firm. A Moving to another question will save this response.
It is generally argued that the takeover constraint : Deters management from engaging in opportunistic behavior. Deters management from considering acquiring other companies. Deters management from declaring dividends. Deters management from increasing a firm’s level of borrowing.
Offer some reasons that a company might choose to merge with or acquire another company.
Describe some takeover defenses.
Directors are under a duty to exercise independent judgment. What does this mean? Why do floating charge holders frequently include a negative pledge clause in the charge?
A firm commitment underwriting is generally safer for the issuing firm compared to the best effort basis. Critically explain whether the issuing firms would be better off under firm commitment basis.
true or false bomdholders never have any control over the actions of a firm
Suggest some ways in which firms have tried to avoid being part of a target takeover.

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The Reading states that in a takeover bid, management is permitted to take defensive action provided their actions do not have long term detrimental effects on the company itself.