As hostile takeovers are most likely to occur when a firm's stock is overvalued, the managers have a strong incentive to undervalue the firm's stock relative to its potential.

Question

Quizplus · Accepted Answer

Hostile takeovers are most likely to occur when a firm's stock is undervalued, not overvalued. Therefore, managers have an incentive to overvalue the firm's stock, not undervalue it.

As Hostile Takeovers Are Most Likely to Occur When a Firm's