Question

Which of the following statements is CORRECT? Select one: a. One disadvantage of organizing a business as a corporation rather than a partnership is that the equity investors in a corporation are exposed to unlimited liability. b. Using restrictive covenants in debt agreements is an effective way to reduce conflicts between stockholders and managers. c. Managers generally welcome hostile takeovers since the "raider" generally offers a price for the stock that is higher than the price before the takeover action started. d. The managers of established, stable companies sometimes attempt to get their state legislatures to impose rules that make it more difficult for raiders to succeed with hostile takeovers. e. The managers of established, stable companies sometimes attempt to get their state legislatures to remove rules that make it more difficult for raiders to succeed with hostile takeovers.

Answer 1

Answer:

e. The managers of established, stable companies sometimes attempt to get their state legislatures to impose rules that make it more difficult for raiders to succeed with hostile takeovers

Explanation:

A hostile takeover refers to a type of corporate merger or acquisition that is carried out against the wishes of the managers of the target company. As a result the stable organisations management attempt to get their state legislatures impose their administrative regulations; thus making it far more difficult for the corporate raider to succeed in hostile takeovers. Moreover the management usually does not prefer the hostile takeovers

Answer 2

Answer:

e. The managers of established, stable companies sometimes attempt to get their state legislatures to remove rules that make it more difficult for raiders to succeed with hostile takeovers.

Explanation:

Hostile takeover is defined as the acquisition of one company by another that is accomplished by going directly to the company's shareholders or fighting to replace management to get the acquisition approved.

The key characteristic of a hostile takeover is that the target company's management does not want the deal to go through. Sometimes a company's management will defend against unwanted hostile takeovers by using several controversial strategies, such as the poison pill defense, a golden parachute, the Pac-Man defense etc. The managers of established companies attempt to get their states lawmakers to remove rules that make it more difficult for raiders to succeed with hostile takeovers. They achieve this by lobbying state lawmakers.