It is quite often we observe some firms takeover target firms from a different industry. If...

 

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It is quite often we observe some firms takeover target firms from a different industry. If diversifying harms firm value and it is more efficient to make diversification at the investor (shareholder) level than at the firm level, why do you think the managements still choose to make diversified acquisitions? Part B [10 marks] Do you believe that shareholders should always have the right to vote on a sale of the firm under any circumstances? Explain. It is quite often we observe some firms takeover target firms from a different industry. If diversifying harms firm value and it is more efficient to make diversification at the investor (shareholder) level than at the firm level, why do you think the managements still choose to make diversified acquisitions? Part B [10 marks] Do you believe that shareholders should always have the right to vote on a sale of the firm under any circumstances? Explain.

Answer rating: 100% (QA)

Part A Why firms diversify through acquisitions While its true that diversification at the firm level can be complex and potentially harmful several factors motivate managers to pursue diversified acq... View the full answer