Why Might Shareholders of an Acquiring Firm Prefer to Finance

question 21

Multiple Choice

Why might shareholders of an acquiring firm prefer to finance mergers with stock rather than with cash?

• A) Stock financing is always less costly due to tax consequences.
• B) EPS fall when mergers are financed with cash.
• C) Target-firm shareholders will bear part of the cost if merger benefits were overestimated.
• D) All merger gains go to the acquirer when financed with stock.

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Definitions:

DSM-5

The fifth edition of the Diagnostic and Statistical Manual of Mental Disorders, a standardized classification and diagnostic tool used by mental health professionals.

Craving Criterion

A concept typically used in addiction studies and clinical diagnostics to describe a strong desire or urge to engage in substance use or specific behaviors.

SUD Symptoms

Symptoms associated with Substance Use Disorder, including but not limited to intense cravings for the substance, inability to control use, and continued use despite negative consequences.

Hypersexual Disorder

A proposed disorder characterized by excessive preoccupation with sexual fantasies, urges, or behaviors that is distressing or impairs personal, social, or occupational functioning.