Small positive or negative returns to acquiring-company shareholders may be explained by:
A)tax loss benefits of a target.
B)perceived cost reductions due to economies of scale in operations.
C)perceived benefit of the method of financing the takeover to reduce agency costs.
D)the over-confidence of acquiring-company management in their ability to value other companies.

Question

Quizplus · Accepted Answer

The over-confidence of acquiring-company management can lead to overestimating the value of the target company, resulting in small positive or negative returns for shareholders.

Small Positive or Negative Returns to Acquiring-Company Shareholders May Be