Which of the following have been suggested as reasons why the stockholders in acquiring firms may not benefit to any significant degree from an acquisition?
I.the price paid for the target firm might equal the target firm's total value
II.management may have priorities other than the interest of the stockholders
III.the takeover market may not be competitive
IV.anticipated merger gains may not be fully achieved
A)I and III only
B)II and IV only
C)I, III, and IV only
D)I, II, and IV only
E)I, II, III, and IV

Question

Quizplus · Accepted Answer

All of the given options could result in the stockholders in acquiring firms not benefiting significantly from an acquisition. If the price paid for the target firm equals its total value (option I), then there will be no increase in value for the acquiring firm. If management has priorities other than the interest of the stockholders (option II), they may ignore the impact on stock prices. If the takeover market is not competitive (option III), there could be less price pressure and less incentive for the acquiring firm to get a good deal. Finally, if anticipated merger gains are not fully achieved (option IV), there will not be as much growth in the value of the acquiring firm, and stock prices may not rise as much as anticipated.

Which of the Following Have Been Suggested as Reasons Why