Since a manager's central goal is to maximize the firm's stock price, any merger offer that provides stockholders with significant gains over the current stock price will be approved by the current management team.

Question

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While maximizing the firm's stock price is a central goal, management may reject merger offers that provide significant gains if they believe the merger is not in the long-term best interest of the company, or if it threatens their job security or control over the firm.

Since a Manager's Central Goal Is to Maximize the Firm's