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.

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Definitions:

Labor Market Outcomes

The results or consequences of interaction between job seekers and employers in the labor market, often measured by factors such as employment rates, wage levels, and the quality of working conditions.

Bargaining Strength

The capacity of a negotiating party, either a labor union or an employer, to achieve its objectives in the bargaining process, influenced by factors such as membership support, economic conditions, and legal context.

Industrial Relations Perspective

A viewpoint that studies the relationships between management and employees, focusing on collective bargaining, labor laws, and unions.

Mainstream Model

A widely accepted or conventional theory, method, or practice within a particular field or industry.