Use the following statements to answer this question:
I.Managers may abuse their position and increase the size of the company through acquisitions.
II.It is usually good news for shareholders when their firm is targeted.
A)I and II are both correct.
B)I and II are both incorrect.
C)I is correct and II is incorrect.
D)I is incorrect and II is correct.

Question

Quizplus · Accepted Answer

Both statements are correct. Statement I is true because managers, driven by personal incentives, might pursue acquisitions to grow the company size rather than shareholder value. Statement II is true because being targeted in an acquisition often leads to a premium on the company's current stock price, benefiting shareholders.

Use the Following Statements to Answer This Question