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:

Uninsured Americans

Individuals in the United States who do not have health insurance coverage, affecting their access to healthcare services.

Drug Prices

The cost of pharmaceutical products, influenced by factors such as research and development expenses, manufacturing costs, and market demand.

Health Care Reforms

Changes and improvements made to a country's healthcare system with the aim of increasing access to care, improving quality, and managing healthcare costs.

Stakeholders

Individuals or groups with an interest or concern in something, especially a business or project, and whose opinions and actions can affect its outcome.