If managers do not choose to maximize profit, but pursue some other goal such as revenue maximization or growth,
A) they are more likely to become takeover targets of profit-maximizing firms.
B) they are less likely to be replaced by stockholders.
C) they are less likely to be replaced by the board of directors.
D) they are more likely to have higher profit than if they had pursued that policy explicitly.
E) their companies are more likely to survive in the long run.

Question

Quizplus · Accepted Answer

Profit-maximizing firms are likely to view companies that prioritize revenue maximization or growth as potentially undervalued assets and potential targets for acquisition. Therefore, managers who choose these goals over maximizing profit may become more likely to become takeover targets.

If Managers Do Not Choose to Maximize Profit, but Pursue