Question: 1 - What is the primary reason for over diversification? Is it industrial policies, such as taxes and antitrust regulation, or do firms over diversify

1 - What is the primary reason for over diversification? Is it industrial policies, such as taxes and antitrust regulation, or do firms over diversify because managers pursue their own self-interest through increased compensation, and a reduced risk of job loss? Why?

2 - Is it ethical for managers to diversify a firm rather than return excess earnings to shareholders? Support your answer.

3 - What are three reasons that firms choose to diversify their operations?

4 - What are the two ways to obtain financial economies when using an unrelated diversification strategy?

5 - What motives might encourage managers to over diversify their firms?

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