A Takeover Constraint

question 19

Multiple Choice

A takeover constraint

• A) uses the threat of a takeover to cause the CEO to fear the loss of his or her job.
• B) prevents a company from being taken over.
• C) limits the extent to which managers can pursue strategies that are inconsistent with shareholder interest.
• D) is reduced by corporate raiders.
• E) is greatest when a company's stock price is significantly higher than book value.

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Definitions:

Government Grants

Financial awards given by the government to individuals, organizations, or companies to support activities beneficial to the public without expectation of repayment.

Economic Activities

Economic activities refer to actions that involve the production, distribution, and consumption of goods and services.

Subsidies

Financial support given by the government to businesses, organizations, or individuals, aimed at promoting economic and social policy objectives.

Stagnant Economy

A situation where an economy experiences minimal to no growth, often characterized by high unemployment and low consumer spending.