How can socially responsible mutual funds make takeover of firms less likely?

Question

Quizplus · Accepted Answer

Socially responsible mutual funds can make takeover of firms less likely by raising the share price of firms that engage in social activities. This is because socially responsible investors tend to prefer investing in companies that are engaged in social, environmental and governance activities. As the demand for such stocks increase, their price also increases, making it more expensive for potential acquirers to acquire the company. This can act as a deterrent for takeover bids and help maintain the independence of the socially responsible firm.

How Can Socially Responsible Mutual Funds Make Takeover of Firms