The purpose of the preemptive right is twofold. First, it prevents the management of a...
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Finance
The purpose of the preemptive right is twofold. First, it prevents the management of a corporation from issuing a large number of additional shares and purchasing those shares itself. Management could use this tactic to seize control of the corporation and frustrate the will of the current stockholders. The second, and far more important, reason for the preemptive right is to protect stockholders from a dilution of value. a) True b) False
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