Question: Oftentimes, managers perceive it as an attractive strategic decision to pursue the acquisition of another company. However, evidence suggests that stock prices of acquiring companies

Oftentimes, managers perceive it as an attractive strategic decision to pursue the acquisition of another company. However, evidence suggests that stock prices of acquiring companies often drop after the announcement of an acquisition. a) What are the motives behind mergers and acquisitions? Summarise it. (3 marks) b) Why do the share prices of acquiring companies often decrease following the announcement of a corporate acquisition? Discuss. (2 marks)

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