To critically think about: Whether the act of the management is in the interest of the shareholders. Introduction: The managers of the firm act in the interest of the shareholders based on the following two factors. First factor : The goals of the management are aligned to the shareholders goals. Second factor: The replacement of the managers for not pursuing stockholders’ goals is the second factor. Situation: Person X owns stock in a company. The present share price is $25. There is an announcement made by another company stating that it needs to purchase Person X’s company. It also says that it will pay $35 per share to obtain all the outstanding stocks. Person X’s management starts fighting for the hostile bid.

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Answer 1

Question

Chapter 1, Problem 6CQ

Summary Introduction

To critically think about: Whether the act of the management is in the interest of the shareholders.

Introduction:

The managers of the firm act in the interest of the shareholders based on the following two factors.

First factor: The goals of the management are aligned to the shareholders goals.

Second factor: The replacement of the managers for not pursuing stockholders’ goals is the second factor.

Situation:

Person X owns stock in a company. The present share price is $25. There is an announcement made by another company stating that it needs to purchase Person X’s company. It also says that it will pay $35 per share to obtain all the outstanding stocks. Person X’s management starts fighting for the hostile bid.

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Answer 2

Question

Chapter 1, Problem 6CQ

Summary Introduction

To critically think about: Whether the act of the management is in the interest of the shareholders.

Introduction:

The managers of the firm act in the interest of the shareholders based on the following two factors.

First factor: The goals of the management are aligned to the shareholders goals.

Second factor: The replacement of the managers for not pursuing stockholders’ goals is the second factor.

Situation:

Person X owns stock in a company. The present share price is $25. There is an announcement made by another company stating that it needs to purchase Person X’s company. It also says that it will pay $35 per share to obtain all the outstanding stocks. Person X’s management starts fighting for the hostile bid.

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Answer 3

Question

Chapter 1, Problem 6CQ

Summary Introduction

To critically think about: Whether the act of the management is in the interest of the shareholders.

Introduction:

The managers of the firm act in the interest of the shareholders based on the following two factors.

First factor: The goals of the management are aligned to the shareholders goals.

Second factor: The replacement of the managers for not pursuing stockholders’ goals is the second factor.

Situation:

Person X owns stock in a company. The present share price is $25. There is an announcement made by another company stating that it needs to purchase Person X’s company. It also says that it will pay $35 per share to obtain all the outstanding stocks. Person X’s management starts fighting for the hostile bid.

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Answer 4

Question

Chapter 1, Problem 6CQ

Summary Introduction

To critically think about: Whether the act of the management is in the interest of the shareholders.

Introduction:

The managers of the firm act in the interest of the shareholders based on the following two factors.

First factor: The goals of the management are aligned to the shareholders goals.

Second factor: The replacement of the managers for not pursuing stockholders’ goals is the second factor.

Situation:

Person X owns stock in a company. The present share price is $25. There is an announcement made by another company stating that it needs to purchase Person X’s company. It also says that it will pay $35 per share to obtain all the outstanding stocks. Person X’s management starts fighting for the hostile bid.

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Answer 5

Chapter 1, Problem 6CQ

Summary Introduction

To critically think about: Whether the act of the management is in the interest of the shareholders.

Introduction:

The managers of the firm act in the interest of the shareholders based on the following two factors.

First factor: The goals of the management are aligned to the shareholders goals.

Second factor: The replacement of the managers for not pursuing stockholders’ goals is the second factor.

Situation:

Person X owns stock in a company. The present share price is $25. There is an announcement made by another company stating that it needs to purchase Person X’s company. It also says that it will pay $35 per share to obtain all the outstanding stocks. Person X’s management starts fighting for the hostile bid.

Answer 6

Chapter 1, Problem 6CQ

Summary Introduction

To critically think about: Whether the act of the management is in the interest of the shareholders.

Introduction:

The managers of the firm act in the interest of the shareholders based on the following two factors.

First factor: The goals of the management are aligned to the shareholders goals.

Second factor: The replacement of the managers for not pursuing stockholders’ goals is the second factor.

Situation:

Person X owns stock in a company. The present share price is $25. There is an announcement made by another company stating that it needs to purchase Person X’s company. It also says that it will pay $35 per share to obtain all the outstanding stocks. Person X’s management starts fighting for the hostile bid.

Answer 7

Chapter 1, Problem 6CQ

Summary Introduction

To critically think about: Whether the act of the management is in the interest of the shareholders.

Introduction:

The managers of the firm act in the interest of the shareholders based on the following two factors.

First factor: The goals of the management are aligned to the shareholders goals.

Second factor: The replacement of the managers for not pursuing stockholders’ goals is the second factor.

Situation:

Person X owns stock in a company. The present share price is $25. There is an announcement made by another company stating that it needs to purchase Person X’s company. It also says that it will pay $35 per share to obtain all the outstanding stocks. Person X’s management starts fighting for the hostile bid.

Answer 8

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Answer 9

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Answer 10

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Answer 11

Ch. 1 - Prob. 1CQ Ch. 1 - Prob. 2CQ Ch. 1 - Prob. 3CQ Ch. 1 - Prob. 4CQ Ch. 1 - International Firm Goal Would the goal of...Ch. 1 - Prob. 6CQ Ch. 1 - Prob. 7CQ Ch. 1 - Prob. 8CQ Ch. 1 - Prob. 9CQ Ch. 1 - Prob. 10CQ

Solution Summary: The author analyzes how the managers of a firm act in the interests of shareholders based on two factors: the goals of the management are aligned to the shareholders goals, and the replacement of managers for not pursuing stockholders

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Chapter 1 Solutions