If you wanted to expand your operations into a foreign country with nebulous laws and an unstable political climate, would you favor internal or external expansion? Why?
Answer to relevant QuestionsWhich of the five basic corporate finance functions might be considered nontraditional? Why do you think these functions have become so important in recent years? What role do the FASB and SEC play with regard to GAAP? What is the free cash flow theory of mergers? Why do you think that managers might be tempted to pursue size-increasing mergers even when these do not maximize value? As conglomerate mergers and corporate diversification have proven to be failures in general, why would any manager pursue these objectives? Can you think of any cases where corporate diversification has worked successfully? ...Relate the industry shock theory of mergers to the history of merger waves. What were the motivating factors for increased merger activity in each of the five major merger waves?
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