In a Study of the Effect of International Acquisitions on the Stock

question 36

Multiple Choice

In a study of the effect of international acquisitions on the stock prices of U.S. firms. U.S. acquiring firms with information-based intangible assets experience a significantly positive stock price reaction upon foreign acquisition.

• A)This is consistent with the finding that the market value of the firm is positively related to its multinationality because of the firm's intangible assets, such as R&D capabilities, with public good nature.
• B)It is not the multinationality per se that contributes to the firm's value.
• C)Their empirical findings support the (forward-) internalization theory of FDI.
• D)All of the above

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Definitions:

Variable Costs

are expenses that change in proportion to the activity of a business, such as the cost of raw materials used in production.

Differential Costs

The difference in total cost that will result from selecting one alternative over another.

Fixed Costs

Fixed costs include payments like rent, salaries, and insurance that are unaffected by variations in production or sales volumes.

Straight-Line Depreciation

A method of calculating the depreciation of an asset by evenly spreading its cost over its useful life.