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Chapter 5: Q11DQ. (page 648)

Why do management and stockholders often have divergent viewpoints about the desirability of a takeover?

Short Answer

Expert verified

Management may have the option to retain the ownership or same job level after the takeover, whereas stockholders may have an option to increase the current shareholdings.

Step by step solution

01

Explanation on Takeover

A takeover is a financial activity in which one business entity purchases another entity.

02

Opinion of Management and Stockholder

Management refers to individuals who manage the business. It includes the CEO, CFO, Directors, Chairman, etc. The motive of the takeover of the management may be focused on retaining current job and control. Shareholders invest an amount in business and are focused on increasing the existing wealth after the takeover.

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