The theory of free cash flow describes situations in which:
A)managers of companies are motivated to take over other companies in order to promote their own interests.
B)managers of companies are motivated to take over other companies in order to maximise shareholder wealth.
C)companies with excess liquidity are recognised as viable takeover targets.
D)companies with excess liquidity recognise viable takeover targets.

Question

Quizplus · Accepted Answer

The theory of free cash flow suggests that managers may pursue acquisitions to increase their own power and control, rather than to maximize shareholder wealth, especially when the company has excess cash.

The Theory of Free Cash Flow Describes Situations in Which