The long-run effect on the earnings per share of the merged firm depends largely on ________.
A) the pre-merger P/E ratio
B) the ratio of exchange
C) the synergy of the merged firm
D) the tax considerations

Question

Quizplus · Accepted Answer

The long-run effect on the earnings per share of the merged firm depends largely on the synergy of the merged firm. Synergy refers to the additional value that is created from the combination of two companies. If the merged firm is able to achieve synergy, it can lead to higher earnings per share in the long run. Factors such as the pre-merger P/E ratio, ratio of exchange, and tax considerations can also have an impact, but they are not as important as the synergy of the merged firm.

The Long-Run Effect on the Earnings Per Share of the Merged