It is generally argued that the takeover constraint:
A) deters management from engaging in opportunistic behaviour.
B) deters management from considering acquiring other companies.
C) deters management from declaring dividends.
D) deters management from increasing a firm's level of borrowing.

Question

Quizplus · Accepted Answer

The takeover constraint deters management from engaging in opportunistic behavior by making the firm a less attractive target for takeovers if management does not act in the shareholders' best interests.

It Is Generally Argued That the Takeover Constraint