By satisfying which of the following conditions can shareholders prevent management driven acquisitions?
A)If shareholders could determine which acquisitions will lead to increased profits and which will not
B)If shareholders could direct management to undertake only those acquisitions that will increase shareholder value
C)If shareholders could provide management with the appropriate steps to conduct when performing acquisitions
D)a & b
E)None of the above

Question

Quizplus · Accepted Answer

Shareholders can prevent management driven acquisitions by satisfying conditions (a) and (b). If the shareholders have the power to determine which acquisitions will lead to increased profits and direct management to undertake only those acquisitions that will increase shareholder value, then they can prevent management from making acquisitions that do not benefit the company and its shareholders. Therefore, option D is the correct answer. Option C is not relevant as providing management with appropriate steps to conduct when performing acquisitions does not necessarily prevent management-driven acquisitions. Option A is partially correct as the shareholders' ability to determine which acquisitions will lead to increased profits alone may not prevent management-driven acquisitions.

By Satisfying Which of the Following Conditions Can Shareholders Prevent