Which of the Following Statements Regarding Recapitalization as a Takeover

question 52

Multiple Choice

Which of the following statements regarding recapitalization as a takeover defense is false?

• A) Another defense against a takeover is a recapitalization, in which a company changes its capital structure to make itself less attractive as a target.
• B) Restructuring itself can produce efficiency gains, often removing the principal motivation for the takeover in the first place.
• C) By increasing leverage on its own, the target firm can reap the benefit of the interest tax shields.
• D) In many cases, a substantial portion of the synergy gains that an acquirer anticipates from a takeover are savings from a decrease in leverage as well as other cost reductions.

---

Definitions:

Age Discrimination

Prejudice or discrimination against individuals on the basis of their age, typically targeting older people.

Employment Act

Legislation that governs the conditions of work, including employment terms, rights, and obligations.

Forty Years

A period of time equal to four decades.

Punitive Damages

Monetary compensation awarded to an injured party that exceeds simple compensation and is intended to punish the wrongdoer.