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Many firms have devised defenses that make it more difficult or costly for other firms to...

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Finance

Many firms have devised defenses that make it more difficult orcostly for other firms to take them over. How might such defensesaffect the firm’s agency problems? Are managers of firms withformidable takeover defenses more or less likely to act in theshareholders’ interests rather than their own? What would youexpect to happen to the share price when management proposes toinstitute such defenses?

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Organization follow various strategies to make it more difficult or costly for other firms to take them over These strategy is mostly used by Target company to discourage the acquiring company For example if Company A is planning to acquire Company B and company B doesnt want to get acquired then they can use the defense strategy In which company B will increase the cost of takeover to such extend at which company A will not    See Answer
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Many firms have devised defenses that make it more difficult orcostly for other firms to take them over. How might such defensesaffect the firm’s agency problems? Are managers of firms withformidable takeover defenses more or less likely to act in theshareholders’ interests rather than their own? What would youexpect to happen to the share price when management proposes toinstitute such defenses?

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