Large Business Combinations in Japan Are Normally Carried Out Through

question 40

Multiple Choice

Large business combinations in Japan are normally carried out through reciprocal ownership of common stock. These networks, or keiretsu, involve a large number of diversified companies centered around a large bank, industrial firm, or trading firm. One of the main benefits of this structure is argued to be:

• A) The monopolistic control of economic segments
• B) The reduction of financial distress costs
• C) Large scale diversification that cannot be done by individual shareholders
• D) Greater efficiency in management because the management skills are homogeneous even for

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