The text gives a number of valid, acceptable reasons for companies to merge. Which of the following is NOT acceptable?
A) Synergistic benefits arising from mergers.
B) Reduction in competition resulting from mergers.
C) Attempts to stabilize earnings by diversifying.
D) Attempts to minimize taxes by acquiring a firm with large accumulated losses that can be used immediately.
E) Using surplus cash to acquire another firm and prevent unfavorable tax consequences for shareholders.

Question

Quizplus · Accepted Answer

Reduction in competition resulting from mergers is not a valid or acceptable reason for companies to merge as it goes against competition laws and can result in anti-trust issues.

The Text Gives a Number of Valid, Acceptable Reasons for Companies