Assume the Shareholders of a Target Firm Benefit from Being

question 35

Multiple Choice

Assume the shareholders of a target firm benefit from being acquired in a stock transaction. Given this, these shareholders are most apt to realize the largest benefit if the:

• A) acquiring firm has the better management team and replaces the target firm's managers.
• B) management of the target firm is more efficient than the management of the acquiring firm which replaces them.
• C) management of both the acquiring firm and the target firm are as equivalent as possible.
• D) current management team of the target firm is kept in place even though the managers of the acquiring firm are more suited to manage the target firm's situation.
• E) new management team is technologically knowledgeable but yet ineffective.

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Definitions:

Ultra Vires

A Latin term meaning “beyond the powers”; in legal context, actions taken by a corporation or company officials that are beyond their legally granted corporate powers.

Quorum

That number of persons, shares represented, or officers who may lawfully transact the business of a meeting called for that purpose.

Adopting And Amending Bylaws

The procedure for creating and modifying the rules that govern the internal management of an organization, typically requiring approval by its governing body or members.

Straight Voting

Straight voting is a voting system in corporate shareholder meetings where each shareholder's voting power is proportional to the number of shares they own, used mainly in electing directors.