Question: In the article about EY, it addresses EY's decision to split its current company into two different companies - auditing and consulting. One of the

In the article about EY, it addresses EY's decision to split its current company into two different companies - auditing and consulting.

One of the benefits of EY being in both the consulting and auditing businesses is that it benefits from economies of scope. But when EY splits up into two businesses, it will no longer benefit from these economies of scope. The company is betting that the positives of splitting up are more than the negatives of losing economies of scope.

Which of the following statements IS NOT a rationale for EY seeking by splitting into two different businesses?

  • Currently EY's consulting business is limited in the technology industry due to regulatory restrictions

  • EY wants to avoid the fate of Arthur Anderson which failed due to problems in its auditing business

  • Regulatory restrictions around conflicts of interest prevent EY from doing consulting work with some of its auditing clients

  • Profit margins in its consulting business could increase after the split up

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