A corporate raider gains a controlling fraction of the shares of a poorly managed company and replaces the board of directors. How does the corporate raider hope to make a profit in this case?

Question

Quizplus · Accepted Answer

By replacing the board of directors with a more competent one, the corporate raider hopes to improve the company's performance and efficiency, which will lead to an increase in stock value. This increase in stock value will allow the raider to sell their shares for a profit. Option A may be a possibility, but it is not a guaranteed outcome of a successful takeover. Option C is also a possibility, but it requires a longer-term approach, and the corporate raider may not necessarily have the patience or willingness to invest in the company's long-term viability. Option D is not directly related to the raider's goals of making a profit.

A Corporate Raider Gains a Controlling Fraction of the Shares