In defending against a hostile takeover, the strategy involving the payment of a large, debt-financed, cash dividend is the ________ strategy.
A) shark repellent
B) golden parachute
C) leveraged recapitalization
D) dividend restructuring

Question

Quizplus · Accepted Answer

The strategy described in the question refers to a leveraged recapitalization, which involves using debt to pay a large cash dividend to shareholders in order to make the company's stock less attractive to potential acquirers. Option A, "shark repellent," refers to tactics used by a company to discourage or deter hostile takeovers. Option B, "golden parachute," refers to compensation packages for top executives in the event of a change in ownership or control of the company. Option D, "dividend restructuring," is not a recognized strategy in the context of defending against a hostile takeover.

In Defending Against a Hostile Takeover, the Strategy Involving the Payment