Are hostile takeovers necessarily bad for firms or their investors? Explain. (Se

Question

Are hostile takeovers necessarily bad for firms or their investors? Explain.

(Select the best choice below.)

A.

Yes. They allow new investors to profit at the expense of employees and existing investors. If existing investors and employees were better off being takenover, there would be no reason for the takeover to be hostile.

B.

No. They are a way to discipline managers who are not working in the interests of shareholders.

C.

Yes. They allow the entity taking over, the raider, to make a quick profit. This profit must come from somewhere. The only place is existing shareholders andemployees, so hostile takeovers must be bad for existing shareholders.

D.

Both (A) and (B) are correct answers.

Explanation / Answer

Answer is B

No. They are a way to discipline managers who are not working in the interests of shareholders.

hostile take over is a way to reduce the wastage and to manage the resources in a more efficient way

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