Question

Diversification is good for shareholders. So why shouldn't managers acquire firms in different industries to diversify a company?

Answer 1

Answer:

The definition would be defined in the clarification portion below, according to the particular context.

Explanation:

• Even before managers accomplish diversification besides trying to create a conglomerate whilst also buying other corporations, it is almost always accomplished at a premium surrounded by white market rates because once shareholders could effectively achieve consolidation according to their own besides investing money throughout multiple organizations.
• Although it may be more difficult to accurately determine productivity in a conglomerate, authority costs will be lower as well as assets might well be apportioned around through segments incompetently.