Diversification is often a poor motive for mergers because:
A) vertical integration is rarely successful.
B) investors can diversify on their own account.
C) it does not produce economies of scale.
D) the increase in taxes overcomes any gains in earnings.

Question

Quizplus · Accepted Answer

Investors have the ability to diversify their own portfolio without the need for a merger. Therefore, diversification is not a strong enough motive for a company to pursue a merger.

Diversification Is Often a Poor Motive for Mergers Because