Conglomerate takeovers are likely to indicate:
A)agency problems between management and shareholders.
B)benefits from diversification for shareholders.
C)companies can reduce risk.
D)that shareholders can benefit from lower risk of default on debt due to less than perfectly correlated earnings streams between the bidder and target.

Question

Quizplus · Accepted Answer

Conglomerate takeovers often suggest agency problems as management may pursue such takeovers to increase their own power and control rather than to maximize shareholder value.

Conglomerate Takeovers Are Likely to Indicate