A Corporate Raider Gains a Controlling Fraction of the Shares

question 26

Multiple Choice

A corporate raider gains a controlling fraction of the shares of a poorly managed company and replaces the board of directors. How does the corporate raider hope to make a profit in this case?

• A) by the sale of the assets held by the company that hold most of its value
• B) by the rise in the value of the stock held by the raider when the new board of directors is judged to be superior to the ousted board of directors
• C) by motivating the board of directors and other stakeholders in the company to make difficult short-term decisions that will increase the long-term viability of the company
• D) by removing the employees expectations of the continued poor performance of the company