Which of the following is NOT an appropriate reason for a merger or acquisition?
A)Economies of scale that result from the merger.
B)The replacement of an inefficient management team.
C)To promote "agency problems."
D)To reduce overlapping costs.

Question

Quizplus · Accepted Answer

"Promoting agency problems" is not a legitimate reason for a merger or acquisition. This would involve using the merger or acquisition to benefit the interests of management at the expense of shareholders or other stakeholders, which is not an ethical or appropriate reason for pursuing such a deal. The other options, such as achieving economies of scale, improving efficiency, and reducing costs, are all common reasons for mergers and acquisitions.

Which of the Following Is NOT an Appropriate Reason for a Merger