CORPORATE FINANCE--CONNECT ACCESS CARD
12th Edition
ISBN: 9781264331062
Author: Ross
Publisher: MCG CUSTOM
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Chapter 29, Problem 8CQ
Summary Introduction
To determine: The actions taken by management of a firm against a hostile acquisition bid from an unwanted suitor and benefits that target firm shareholders receive from defensive tactics and the actions that harmed target firm shareholders from hostile takeover.
Introduction:
It refers to the acquisition where a company acquires the ownership of another company that is target Company, against their rules and regulations.
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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?
What are some defensive tactics that firms can use to resist hostile takeovers?
Suggest some ways in which firms have tried to avoid being part of a target takeover.
Chapter 29 Solutions
CORPORATE FINANCE--CONNECT ACCESS CARD
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- Are poison-pill defenses ethical? If a potential acquirer buys company stock legally, thereby becoming a part owner of the company, should management be allowed to entrench itself against the wishes of this owner? Explain your answer.arrow_forwardIt 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.arrow_forwardIt 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.arrow_forward
- What options does a company have if its board or management is opposed to an acquisition, a merger, or a takeover?arrow_forwardEthical Considerations. Are poison-pill defenses ethical? If a potential acquirer buys company stock legally,thereby becoming a part owner of the company, shouldmanagement be allowed to entrench itself against thewishes of this owner? Explain your answer.arrow_forwardHow could the incentives of business profits create unwarranted influence in times of war?arrow_forward
- Sometimes 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_forwardWhich of the following is NOT normally regarded as being a barrier to hostile takeovers? (Points : 5) Abnormally high executive compensation Targeted share repurchases Shareholder rights provisions Restricted voting rights Poison pillsarrow_forwardIt is quite often we observe some firms takeover target firms from a different industry. If diversifying harms firm value and it is more efficient to make diversification at the investor (shareholder) level than at the firm level, why do you think the managements still choose to make diversified acquisitions?arrow_forward
- What is the possible agency conflict between inside owner/managers and outside shareholders? What are some possible agency conflicts between borrowers and lenders? How is it possible for an employee stock option to be valuable even if the firm’s stock price fails to meet shareholders’ expectations?arrow_forward1. As an executive, there is significant leeway to control the level and quality of public information (within legal reason). What general strategies on information disclosure from a potential acquirer's point of view might result in higher realization of value for their shareholders? To the extent possible, are there any deals that fit into this particular strategy?arrow_forwardThe primary goal of financial management is to maximize firm value. Mergers and Acquisitions (M&A) are critical strategic tools that companies use to achieve growth, gain competitive advantages, and enhance shareholder value. In your essay, please explore the following points: Why conducting M&A may increase firm value. The potential risks associated with M&A transactions. How the M&A threat can mitigate the agency problem. Firms’ management and board of directors may employ anti-takeover provisions (ATPs) to prevent or discourage hostile takeover attempts. Discuss whether ATPs create or destroy firm value.arrow_forward
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