Diversification is often a poor motive for mergers because:
A)Vertical integration is rarely successful
B)Investors can diversify on their own account
C)It does not produce economies of scale
D)The increase in taxes overcomes gains in earnings

Question

Quizplus · Accepted Answer

Investors can diversify their own portfolios by investing in different companies or industries on their own. Mergers solely for the purpose of diversification do not necessarily create value for shareholders and may result in issues such as cultural clashes and integration challenges.

Diversification Is Often a Poor Motive for Mergers Because