Empirical studies generally show that the tax shelter resulting from the ability of the acquiring firm to increase the value of acquired assets to their FMV is a highly important motivating factor for a takeover.

Question

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Empirical studies do not generally show that the tax shelter resulting from the ability of the acquiring firm to increase the value of acquired assets to their fair market value (FMV) is a highly important motivating factor for a takeover. Instead, motivations for takeovers often include achieving economies of scale, entering new markets, acquiring new technologies, or other strategic business reasons. Tax considerations can play a role, but they are typically not the primary motivating factor.

Empirical Studies Generally Show That the Tax Shelter Resulting from the Ability