Sometimes the Management of a Target Firm Fights a Takeover

question 5

Essay

Sometimes the management of a target firm fights a takeover attempt even when that attempt appears to be in the best interest of the shareholders.Why would management take this stance?

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Definitions:

Market Power

The ability of a firm or group of firms to influence the price or control the supply of a product or service in the market.

Herfindahl Index

A measure of market concentration used to evaluate the level of competition within an industry, calculated by summing the squares of each firm's market share.

Four-Firm Concentration Ratio

A metric that measures the total market share possessed by the four largest firms within a specific industry.