PRIN.OF CORPORATE FINANCE
13th Edition
ISBN: 9781260013900
Author: BREALEY
Publisher: RENT MCG
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Question
Chapter 1, Problem 13PS
Summary Introduction
To discuss: The ways such defenses affect the firm’s agency problems.
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Students have asked these similar questions
Suppose you need additional capital to expand,and you sell some stock to outside investors. If youmaintain enough stock to control the company,what type of agency conflict might occur?
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.
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.
Chapter 1 Solutions
PRIN.OF CORPORATE FINANCE
Ch. 1.A - Prob. 1QCh. 1 - Investment and financing decisions Read the...Ch. 1 - Investment and financing decisions Which of the...Ch. 1 - Prob. 3PSCh. 1 - Prob. 4PSCh. 1 - Prob. 5PSCh. 1 - Corporate goals We can imagine the financial...Ch. 1 - Maximizing shareholder value Ms. Espinoza is...Ch. 1 - Opportunity cost of capital FH Corp. continues to...Ch. 1 - Prob. 9PS
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Similar questions
- How does a hostile takeover affect the company’s stakeholder (shareholders, executives, employees, and society in general)? Is it usually beneficial or detrimental to these stakeholders? Why?arrow_forwardIt is an axiom that may be characterized by managers making decisions that conflict with the best interest of the shareholders. a. the risk-return trade-off b. the agency problems c. the curse of competitive markets d. stockholders versus managersarrow_forwardSometimes the management of a target firms fights a take over attempt even when that attempt appears to be in the best interest of the shareholders. Why would management take this stance? I need rush answer thankyouarrow_forward
- What are some defensive tactics that firms can use to resist hostile takeovers?arrow_forwardWhich of the following statements is CORRECT? One of the ways in which firms can mitigate or reduce potential conflicts between bondholders and stockholders is by increasing the amount of debt in the capital structure. The threat of takeover generally increases potential conflicts between stockholders and managers. Managerial compensation plans cannot be used to reduce potential conflicts between stockholders and managers. The threat of takeovers tends to reduce potential conflicts between stockholders and managers. The creation of the Securities and Exchange Commission (SEC) eliminated conflicts between managers and stockholders.arrow_forwardWhich one of the following actions by a financial manager creates an agency problem? Lowering selling prices that will result in increased firm value Agreeing to expand the company at the expense of stockholders' value Borrowing money when doing so creates value for the firm Agreeing to pay management bonuses based on the market value of the firm's stockarrow_forward
- How could the incentives of business profits create unwarranted influence in times of war?arrow_forwardReal options reflect the management's ability to adopt and later revise corporate investment decisions. Select one: True False Any strategic transaction can unlock additional values for both parties involved in the transaction, these additional benefits can't be accessed by each party separately. Select one: True False Book values do not mirror actual market values for manufacturing companies, but they may be more accurate for distribution firms. Select one: True False When a company invites other companies to acquire its business, its considered as a friendly acquisition.arrow_forwardCash-rich firms often make questionable acquisitions, rather than pay out the cash to shareholders. This: Is because diversification is too costly for individuals. Is because diversification eliminates inefficiencies. Is an example of the bootstrap game Is an example of an agency problemarrow_forward
- Which of the following does not help align managerial and shareholder incentives? Question options: a) Market for Corporate Control b) Product Market Competition c) Antitrust Law d) Corporate Law e) Markets for Directorsarrow_forwardYou observed that high-level managers make superior returns on investments in their company’s stock. Would this be a violation of weak-form market efficiency? Would it be a violation of strong-form market efficiency?arrow_forwardSuggest some ways in which firms have tried to avoid being part of a target takeover.arrow_forward
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