Which one of the following statements is correct?

Question

Quizplus · Accepted Answer

Proxy contests in the USA tend to result in an increase in the targeted firm's stock price, as they signal that the firm is undervalued and that there is potential for a takeover premium. Proxy contests in Europe normally cause a drop in the stock price of the targeted firm, as they are seen as a sign of instability and uncertainty. While their outcome is not binding for the management, proxy contests in the USA are more likely to earn shareholder approval than in Europe, as US shareholders have more power and are more likely to vote in favor of proposals that they believe will benefit them.

Which One of the Following Statements Is Correct