Which one of the following is the least likely reason a company may acquire an ownership interest in another company? Select one: a.To benefit form an overvaluing of assets in the investee company b. To oust an inefficient management team c. To take advantage of operating and/or cost synergies d. To exercise an active role in the business' activities

Which one of the following is the least likely reason a company may acquire an ownership interest in another company? Select one: a.To benefit form an overvaluing of assets in the investee company b. To oust an inefficient management team c. To take advantage of operating and/or cost synergies d. To exercise an active role in the business' activities

Business Its Legal Ethical & Global Environment

10th Edition

ISBN:9781305224414

Author:JENNINGS

Publisher:JENNINGS

Chapter19: Governance And Regulation

Section: Chapter Questions

Problem 1DQ

See similar textbooks

Similar questions

Which of the following is NOT normally regarded as being a good reason to establish an ESOP? a. To help retain valued employees. b. To increase worker productivity. c. To make it easier to grant stock options to employees. d. To enable the firm to borrow at a below-market interest rate. e. To help prevent a hostile takeover.
A concept that a business enterprise will not be sold or liquidated in the nearfuture is known as :(a) Going concern(b) Economic entity(c) Monetary unit(d) None of the above
A According to shankman(1999), two features make agency relations special. One of this is inherent conflict of interest between shareholders and managers. What is the other? a- limited communication between owners and managers b- large difference in defined rights and obligations c- informational asymmetry between principal and agents d- short term focus of the ownership goals
A well-run company should align the management’s interest and with the owner’s interests. What are some actions that stockholders can take to ensure that management’s and stockholders’ interests are aligned? Is this important? What are some of the risks/consequences if the management’s interests are not aligned with the owners?
If a firm's busines activities do not results in profit maximisation, whilst alternative exist,then such activities amount to irresponsible actions. Discuss 5 sets of economic responsibilities firm must embrace to ensure the protection and enhancement of the business
The Principal-Agent Problem arises A) because managers have little incentive to work in the interest of shareholders when this means working against their own self-interest. B) because of the separation of ownership and control in a corporation. C) Both A and B D) None of the above
Which of the following situations would compel the management of a company to embark on acapital reduction/reorganisation scheme?A When it wants to make a rights issueB When the company is to be liquidatedC When the company makes persistent losses but management is optimistic about a positive turnaroundD When the company wants to reward the existing shareholders by he issue of bonus shares
Choose the correct.Which of the following does not indicate an investor company’s ability to significantly influence an investee?a. Material intra-entity transactions.b. The investor owns 30 percent of the investee but another owner holds the remaining 70 percent.c. Interchange of personnel.d. Technological dependency.
Shareholder value is defined as a. A company's value utilized prevailingly by creditors b. A company's value utilized prevailingly by debtors c. A valuation approach of a business entity that provides essential information for shareholders d. Valuation approach of a business entity that provides essential information for stakeholders
Which of the following does not help align managerial and shareholder incentives? Question options: a) Market for Corporate Control b) Product Market Competition c) Antitrust Law d) Corporate Law e) Markets for Directors
Which of the following statements is CORRECT? Select one: a. Conflict of interest between shareholders and managers is not possible. b. By definition, the agency problem can only take place in corporations but not in proprietorships and partnerships. c. Conflict of interest between shareholders and bondholders is not possible. d. Managers always work to maximize the long-run value, and therefore the price, of their company stocks. This is exactly what shareholders desire.
Which of the following objectives of the company creates immoral practices such as: corrupt practice, unfair trade practice, etc.? Select one: A. None of the given options B. Profit Maximization C. Welfare Maximization D. Wealth Maximization