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Directions: The passage below is followed by a question based on its content. Answer the question on the basis of what is stated or implied in the passage.The 1980s have come to be regarded as the decade of corporate consolidation in the United States, with the number of mergers and their dollar value both setting records. Many public forums have questioned, on both social and economic grounds, the merits of this takeover frenzy. Even more controversial than the mergers themselves, however, is the reaction of the management of target firms. No longer is management content to be passive or to put up minimal resistance in the face of an unwelcome takeover attempt. Indeed, the responses of target managements have become as imaginative as the methods used by the would–be acquirers. These so–called anti-takeover tactics have received nearly universal condemnation from government regulatory bodies, the financial press, and some academic publications. Why is there so much criticism when management resists takeovers? At the most general level, such criticism is based on studies that find a negative return to shareholders when a negotiated (friendly) merger is unsuccessful. These studies examine the cumulative return from the period just prior to the first public announcement of the proposed merger through the announcement of cancellation. Results range from a total return of –9.02 per cent to + 3.68 per cent, with an average of –2.88 percent. In unsuccessful mergers, therefore, stockholders in target firms lose on average nearly 3 per cent of the shares value.But looking at the returns only through the termination date can be misleading. Other studies examining the period from six months prior to an offer to six months after the offer have found that the total return averages nearly +36 per cent, even though the offer was unsuccessful. Given the typical stock market reaction to unsuccessful negotiated mergers, this is a curious finding. The explanation for this seeming anomaly emerges when firms are divided into two groups: those eventually acquired by some other bidder, and those not acquired. Firms that were not acquired eventually lost the entire 36 per cent return. But firms subsequently acquired, earned an additional 20 per cent return above the initial 36 per cent, earning shareholders a total return of 56 per cent. Those earnings compare favorably to the overall average return of 30 percent earned by shareholders & of all companies successfully acquired. These results suggest that some form of resistance by management may be desirable. Playing "hard to get" may influence the initial suitor to increase the bid, or it may permit time for competing bids to be submitted. It is possible, however, to have too much of a good thing. When management actions are designed solely to eliminate a takeover by a specific bidder, then shareholders may be harmed. Nevertheless, anti-takeover tactics do not deserve the blanket condemnation they receive in the press.Q.Which of the following, if true, would most seriously weaken the authors conclusion about the benefits of management resistance to takeovers?a)A third category of mergers, comprising firms that underwent several unsuccessful bids before being acquired, shows a rate of return to shareholders somewhere between the rates for the other two categories.b)When acquisitions are studied over a two-year period, companies that resisted takeover attempts show the same return to shareholders as companies that did not resist.c)The 56 per cent return to shareholders earned when companies are acquired after an unsuccessful takeover bid, is an average that includes companies whose stock declined in value as well as companies whose stock gained in value.d)Of the companies whose managements resisted acquisition attempts, about fifty per cent experienced an increase in stock prices and fifty per cent suffered a decrease in stock prices.e)Companies thatunsuccessfullyresisted turnover suffer setbacks later due to the reduced sale ability of their stock.Correct answer is option 'B'. Can you explain this answer? for CAT 2024 is part of CAT preparation. The Question and answers have been prepared according to the CAT exam syllabus. Information about Directions: The passage below is followed by a question based on its content. Answer the question on the basis of what is stated or implied in the passage.The 1980s have come to be regarded as the decade of corporate consolidation in the United States, with the number of mergers and their dollar value both setting records. Many public forums have questioned, on both social and economic grounds, the merits of this takeover frenzy. Even more controversial than the mergers themselves, however, is the reaction of the management of target firms. No longer is management content to be passive or to put up minimal resistance in the face of an unwelcome takeover attempt. Indeed, the responses of target managements have become as imaginative as the methods used by the would–be acquirers. These so–called anti-takeover tactics have received nearly universal condemnation from government regulatory bodies, the financial press, and some academic publications. Why is there so much criticism when management resists takeovers? At the most general level, such criticism is based on studies that find a negative return to shareholders when a negotiated (friendly) merger is unsuccessful. These studies examine the cumulative return from the period just prior to the first public announcement of the proposed merger through the announcement of cancellation. Results range from a total return of –9.02 per cent to + 3.68 per cent, with an average of –2.88 percent. In unsuccessful mergers, therefore, stockholders in target firms lose on average nearly 3 per cent of the shares value.But looking at the returns only through the termination date can be misleading. Other studies examining the period from six months prior to an offer to six months after the offer have found that the total return averages nearly +36 per cent, even though the offer was unsuccessful. Given the typical stock market reaction to unsuccessful negotiated mergers, this is a curious finding. The explanation for this seeming anomaly emerges when firms are divided into two groups: those eventually acquired by some other bidder, and those not acquired. Firms that were not acquired eventually lost the entire 36 per cent return. But firms subsequently acquired, earned an additional 20 per cent return above the initial 36 per cent, earning shareholders a total return of 56 per cent. Those earnings compare favorably to the overall average return of 30 percent earned by shareholders & of all companies successfully acquired. These results suggest that some form of resistance by management may be desirable. Playing "hard to get" may influence the initial suitor to increase the bid, or it may permit time for competing bids to be submitted. It is possible, however, to have too much of a good thing. When management actions are designed solely to eliminate a takeover by a specific bidder, then shareholders may be harmed. Nevertheless, anti-takeover tactics do not deserve the blanket condemnation they receive in the press.Q.Which of the following, if true, would most seriously weaken the authors conclusion about the benefits of management resistance to takeovers?a)A third category of mergers, comprising firms that underwent several unsuccessful bids before being acquired, shows a rate of return to shareholders somewhere between the rates for the other two categories.b)When acquisitions are studied over a two-year period, companies that resisted takeover attempts show the same return to shareholders as companies that did not resist.c)The 56 per cent return to shareholders earned when companies are acquired after an unsuccessful takeover bid, is an average that includes companies whose stock declined in value as well as companies whose stock gained in value.d)Of the companies whose managements resisted acquisition attempts, about fifty per cent experienced an increase in stock prices and fifty per cent suffered a decrease in stock prices.e)Companies thatunsuccessfullyresisted turnover suffer setbacks later due to the reduced sale ability of their stock.Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for CAT 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Directions: The passage below is followed by a question based on its content. Answer the question on the basis of what is stated or implied in the passage.The 1980s have come to be regarded as the decade of corporate consolidation in the United States, with the number of mergers and their dollar value both setting records. Many public forums have questioned, on both social and economic grounds, the merits of this takeover frenzy. Even more controversial than the mergers themselves, however, is the reaction of the management of target firms. No longer is management content to be passive or to put up minimal resistance in the face of an unwelcome takeover attempt. Indeed, the responses of target managements have become as imaginative as the methods used by the would–be acquirers. These so–called anti-takeover tactics have received nearly universal condemnation from government regulatory bodies, the financial press, and some academic publications. Why is there so much criticism when management resists takeovers? At the most general level, such criticism is based on studies that find a negative return to shareholders when a negotiated (friendly) merger is unsuccessful. These studies examine the cumulative return from the period just prior to the first public announcement of the proposed merger through the announcement of cancellation. Results range from a total return of –9.02 per cent to + 3.68 per cent, with an average of –2.88 percent. In unsuccessful mergers, therefore, stockholders in target firms lose on average nearly 3 per cent of the shares value.But looking at the returns only through the termination date can be misleading. Other studies examining the period from six months prior to an offer to six months after the offer have found that the total return averages nearly +36 per cent, even though the offer was unsuccessful. Given the typical stock market reaction to unsuccessful negotiated mergers, this is a curious finding. The explanation for this seeming anomaly emerges when firms are divided into two groups: those eventually acquired by some other bidder, and those not acquired. Firms that were not acquired eventually lost the entire 36 per cent return. But firms subsequently acquired, earned an additional 20 per cent return above the initial 36 per cent, earning shareholders a total return of 56 per cent. Those earnings compare favorably to the overall average return of 30 percent earned by shareholders & of all companies successfully acquired. These results suggest that some form of resistance by management may be desirable. Playing "hard to get" may influence the initial suitor to increase the bid, or it may permit time for competing bids to be submitted. It is possible, however, to have too much of a good thing. When management actions are designed solely to eliminate a takeover by a specific bidder, then shareholders may be harmed. Nevertheless, anti-takeover tactics do not deserve the blanket condemnation they receive in the press.Q.Which of the following, if true, would most seriously weaken the authors conclusion about the benefits of management resistance to takeovers?a)A third category of mergers, comprising firms that underwent several unsuccessful bids before being acquired, shows a rate of return to shareholders somewhere between the rates for the other two categories.b)When acquisitions are studied over a two-year period, companies that resisted takeover attempts show the same return to shareholders as companies that did not resist.c)The 56 per cent return to shareholders earned when companies are acquired after an unsuccessful takeover bid, is an average that includes companies whose stock declined in value as well as companies whose stock gained in value.d)Of the companies whose managements resisted acquisition attempts, about fifty per cent experienced an increase in stock prices and fifty per cent suffered a decrease in stock prices.e)Companies thatunsuccessfullyresisted turnover suffer setbacks later due to the reduced sale ability of their stock.Correct answer is option 'B'. Can you explain this answer?.

Solutions for Directions: The passage below is followed by a question based on its content. Answer the question on the basis of what is stated or implied in the passage.The 1980s have come to be regarded as the decade of corporate consolidation in the United States, with the number of mergers and their dollar value both setting records. Many public forums have questioned, on both social and economic grounds, the merits of this takeover frenzy. Even more controversial than the mergers themselves, however, is the reaction of the management of target firms. No longer is management content to be passive or to put up minimal resistance in the face of an unwelcome takeover attempt. Indeed, the responses of target managements have become as imaginative as the methods used by the would–be acquirers. These so–called anti-takeover tactics have received nearly universal condemnation from government regulatory bodies, the financial press, and some academic publications. Why is there so much criticism when management resists takeovers? At the most general level, such criticism is based on studies that find a negative return to shareholders when a negotiated (friendly) merger is unsuccessful. These studies examine the cumulative return from the period just prior to the first public announcement of the proposed merger through the announcement of cancellation. Results range from a total return of –9.02 per cent to + 3.68 per cent, with an average of –2.88 percent. In unsuccessful mergers, therefore, stockholders in target firms lose on average nearly 3 per cent of the shares value.But looking at the returns only through the termination date can be misleading. Other studies examining the period from six months prior to an offer to six months after the offer have found that the total return averages nearly +36 per cent, even though the offer was unsuccessful. Given the typical stock market reaction to unsuccessful negotiated mergers, this is a curious finding. The explanation for this seeming anomaly emerges when firms are divided into two groups: those eventually acquired by some other bidder, and those not acquired. Firms that were not acquired eventually lost the entire 36 per cent return. But firms subsequently acquired, earned an additional 20 per cent return above the initial 36 per cent, earning shareholders a total return of 56 per cent. Those earnings compare favorably to the overall average return of 30 percent earned by shareholders & of all companies successfully acquired. These results suggest that some form of resistance by management may be desirable. Playing "hard to get" may influence the initial suitor to increase the bid, or it may permit time for competing bids to be submitted. It is possible, however, to have too much of a good thing. When management actions are designed solely to eliminate a takeover by a specific bidder, then shareholders may be harmed. Nevertheless, anti-takeover tactics do not deserve the blanket condemnation they receive in the press.Q.Which of the following, if true, would most seriously weaken the authors conclusion about the benefits of management resistance to takeovers?a)A third category of mergers, comprising firms that underwent several unsuccessful bids before being acquired, shows a rate of return to shareholders somewhere between the rates for the other two categories.b)When acquisitions are studied over a two-year period, companies that resisted takeover attempts show the same return to shareholders as companies that did not resist.c)The 56 per cent return to shareholders earned when companies are acquired after an unsuccessful takeover bid, is an average that includes companies whose stock declined in value as well as companies whose stock gained in value.d)Of the companies whose managements resisted acquisition attempts, about fifty per cent experienced an increase in stock prices and fifty per cent suffered a decrease in stock prices.e)Companies thatunsuccessfullyresisted turnover suffer setbacks later due to the reduced sale ability of their stock.Correct answer is option 'B'. Can you explain this answer? in English & in Hindi are available as part of our courses for CAT. Download more important topics, notes, lectures and mock test series for CAT Exam by signing up for free.

Here you can find the meaning of Directions: The passage below is followed by a question based on its content. Answer the question on the basis of what is stated or implied in the passage.The 1980s have come to be regarded as the decade of corporate consolidation in the United States, with the number of mergers and their dollar value both setting records. Many public forums have questioned, on both social and economic grounds, the merits of this takeover frenzy. Even more controversial than the mergers themselves, however, is the reaction of the management of target firms. No longer is management content to be passive or to put up minimal resistance in the face of an unwelcome takeover attempt. Indeed, the responses of target managements have become as imaginative as the methods used by the would–be acquirers. These so–called anti-takeover tactics have received nearly universal condemnation from government regulatory bodies, the financial press, and some academic publications. Why is there so much criticism when management resists takeovers? At the most general level, such criticism is based on studies that find a negative return to shareholders when a negotiated (friendly) merger is unsuccessful. These studies examine the cumulative return from the period just prior to the first public announcement of the proposed merger through the announcement of cancellation. Results range from a total return of –9.02 per cent to + 3.68 per cent, with an average of –2.88 percent. In unsuccessful mergers, therefore, stockholders in target firms lose on average nearly 3 per cent of the shares value.But looking at the returns only through the termination date can be misleading. Other studies examining the period from six months prior to an offer to six months after the offer have found that the total return averages nearly +36 per cent, even though the offer was unsuccessful. Given the typical stock market reaction to unsuccessful negotiated mergers, this is a curious finding. The explanation for this seeming anomaly emerges when firms are divided into two groups: those eventually acquired by some other bidder, and those not acquired. Firms that were not acquired eventually lost the entire 36 per cent return. But firms subsequently acquired, earned an additional 20 per cent return above the initial 36 per cent, earning shareholders a total return of 56 per cent. Those earnings compare favorably to the overall average return of 30 percent earned by shareholders & of all companies successfully acquired. These results suggest that some form of resistance by management may be desirable. Playing "hard to get" may influence the initial suitor to increase the bid, or it may permit time for competing bids to be submitted. It is possible, however, to have too much of a good thing. When management actions are designed solely to eliminate a takeover by a specific bidder, then shareholders may be harmed. Nevertheless, anti-takeover tactics do not deserve the blanket condemnation they receive in the press.Q.Which of the following, if true, would most seriously weaken the authors conclusion about the benefits of management resistance to takeovers?a)A third category of mergers, comprising firms that underwent several unsuccessful bids before being acquired, shows a rate of return to shareholders somewhere between the rates for the other two categories.b)When acquisitions are studied over a two-year period, companies that resisted takeover attempts show the same return to shareholders as companies that did not resist.c)The 56 per cent return to shareholders earned when companies are acquired after an unsuccessful takeover bid, is an average that includes companies whose stock declined in value as well as companies whose stock gained in value.d)Of the companies whose managements resisted acquisition attempts, about fifty per cent experienced an increase in stock prices and fifty per cent suffered a decrease in stock prices.e)Companies thatunsuccessfullyresisted turnover suffer setbacks later due to the reduced sale ability of their stock.Correct answer is option 'B'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of Directions: The passage below is followed by a question based on its content. Answer the question on the basis of what is stated or implied in the passage.The 1980s have come to be regarded as the decade of corporate consolidation in the United States, with the number of mergers and their dollar value both setting records. Many public forums have questioned, on both social and economic grounds, the merits of this takeover frenzy. Even more controversial than the mergers themselves, however, is the reaction of the management of target firms. No longer is management content to be passive or to put up minimal resistance in the face of an unwelcome takeover attempt. Indeed, the responses of target managements have become as imaginative as the methods used by the would–be acquirers. These so–called anti-takeover tactics have received nearly universal condemnation from government regulatory bodies, the financial press, and some academic publications. Why is there so much criticism when management resists takeovers? At the most general level, such criticism is based on studies that find a negative return to shareholders when a negotiated (friendly) merger is unsuccessful. These studies examine the cumulative return from the period just prior to the first public announcement of the proposed merger through the announcement of cancellation. Results range from a total return of –9.02 per cent to + 3.68 per cent, with an average of –2.88 percent. In unsuccessful mergers, therefore, stockholders in target firms lose on average nearly 3 per cent of the shares value.But looking at the returns only through the termination date can be misleading. Other studies examining the period from six months prior to an offer to six months after the offer have found that the total return averages nearly +36 per cent, even though the offer was unsuccessful. Given the typical stock market reaction to unsuccessful negotiated mergers, this is a curious finding. The explanation for this seeming anomaly emerges when firms are divided into two groups: those eventually acquired by some other bidder, and those not acquired. Firms that were not acquired eventually lost the entire 36 per cent return. But firms subsequently acquired, earned an additional 20 per cent return above the initial 36 per cent, earning shareholders a total return of 56 per cent. Those earnings compare favorably to the overall average return of 30 percent earned by shareholders & of all companies successfully acquired. These results suggest that some form of resistance by management may be desirable. Playing "hard to get" may influence the initial suitor to increase the bid, or it may permit time for competing bids to be submitted. It is possible, however, to have too much of a good thing. When management actions are designed solely to eliminate a takeover by a specific bidder, then shareholders may be harmed. Nevertheless, anti-takeover tactics do not deserve the blanket condemnation they receive in the press.Q.Which of the following, if true, would most seriously weaken the authors conclusion about the benefits of management resistance to takeovers?a)A third category of mergers, comprising firms that underwent several unsuccessful bids before being acquired, shows a rate of return to shareholders somewhere between the rates for the other two categories.b)When acquisitions are studied over a two-year period, companies that resisted takeover attempts show the same return to shareholders as companies that did not resist.c)The 56 per cent return to shareholders earned when companies are acquired after an unsuccessful takeover bid, is an average that includes companies whose stock declined in value as well as companies whose stock gained in value.d)Of the companies whose managements resisted acquisition attempts, about fifty per cent experienced an increase in stock prices and fifty per cent suffered a decrease in stock prices.e)Companies thatunsuccessfullyresisted turnover suffer setbacks later due to the reduced sale ability of their stock.Correct answer is option 'B'. Can you explain this answer?, a detailed solution for Directions: The passage below is followed by a question based on its content. Answer the question on the basis of what is stated or implied in the passage.The 1980s have come to be regarded as the decade of corporate consolidation in the United States, with the number of mergers and their dollar value both setting records. Many public forums have questioned, on both social and economic grounds, the merits of this takeover frenzy. Even more controversial than the mergers themselves, however, is the reaction of the management of target firms. No longer is management content to be passive or to put up minimal resistance in the face of an unwelcome takeover attempt. Indeed, the responses of target managements have become as imaginative as the methods used by the would–be acquirers. These so–called anti-takeover tactics have received nearly universal condemnation from government regulatory bodies, the financial press, and some academic publications. Why is there so much criticism when management resists takeovers? At the most general level, such criticism is based on studies that find a negative return to shareholders when a negotiated (friendly) merger is unsuccessful. These studies examine the cumulative return from the period just prior to the first public announcement of the proposed merger through the announcement of cancellation. Results range from a total return of –9.02 per cent to + 3.68 per cent, with an average of –2.88 percent. In unsuccessful mergers, therefore, stockholders in target firms lose on average nearly 3 per cent of the shares value.But looking at the returns only through the termination date can be misleading. Other studies examining the period from six months prior to an offer to six months after the offer have found that the total return averages nearly +36 per cent, even though the offer was unsuccessful. Given the typical stock market reaction to unsuccessful negotiated mergers, this is a curious finding. The explanation for this seeming anomaly emerges when firms are divided into two groups: those eventually acquired by some other bidder, and those not acquired. Firms that were not acquired eventually lost the entire 36 per cent return. But firms subsequently acquired, earned an additional 20 per cent return above the initial 36 per cent, earning shareholders a total return of 56 per cent. Those earnings compare favorably to the overall average return of 30 percent earned by shareholders & of all companies successfully acquired. These results suggest that some form of resistance by management may be desirable. Playing "hard to get" may influence the initial suitor to increase the bid, or it may permit time for competing bids to be submitted. It is possible, however, to have too much of a good thing. When management actions are designed solely to eliminate a takeover by a specific bidder, then shareholders may be harmed. Nevertheless, anti-takeover tactics do not deserve the blanket condemnation they receive in the press.Q.Which of the following, if true, would most seriously weaken the authors conclusion about the benefits of management resistance to takeovers?a)A third category of mergers, comprising firms that underwent several unsuccessful bids before being acquired, shows a rate of return to shareholders somewhere between the rates for the other two categories.b)When acquisitions are studied over a two-year period, companies that resisted takeover attempts show the same return to shareholders as companies that did not resist.c)The 56 per cent return to shareholders earned when companies are acquired after an unsuccessful takeover bid, is an average that includes companies whose stock declined in value as well as companies whose stock gained in value.d)Of the companies whose managements resisted acquisition attempts, about fifty per cent experienced an increase in stock prices and fifty per cent suffered a decrease in stock prices.e)Companies thatunsuccessfullyresisted turnover suffer setbacks later due to the reduced sale ability of their stock.Correct answer is option 'B'. Can you explain this answer? has been provided alongside types of Directions: The passage below is followed by a question based on its content. Answer the question on the basis of what is stated or implied in the passage.The 1980s have come to be regarded as the decade of corporate consolidation in the United States, with the number of mergers and their dollar value both setting records. Many public forums have questioned, on both social and economic grounds, the merits of this takeover frenzy. Even more controversial than the mergers themselves, however, is the reaction of the management of target firms. No longer is management content to be passive or to put up minimal resistance in the face of an unwelcome takeover attempt. Indeed, the responses of target managements have become as imaginative as the methods used by the would–be acquirers. These so–called anti-takeover tactics have received nearly universal condemnation from government regulatory bodies, the financial press, and some academic publications. Why is there so much criticism when management resists takeovers? At the most general level, such criticism is based on studies that find a negative return to shareholders when a negotiated (friendly) merger is unsuccessful. These studies examine the cumulative return from the period just prior to the first public announcement of the proposed merger through the announcement of cancellation. Results range from a total return of –9.02 per cent to + 3.68 per cent, with an average of –2.88 percent. In unsuccessful mergers, therefore, stockholders in target firms lose on average nearly 3 per cent of the shares value.But looking at the returns only through the termination date can be misleading. Other studies examining the period from six months prior to an offer to six months after the offer have found that the total return averages nearly +36 per cent, even though the offer was unsuccessful. Given the typical stock market reaction to unsuccessful negotiated mergers, this is a curious finding. The explanation for this seeming anomaly emerges when firms are divided into two groups: those eventually acquired by some other bidder, and those not acquired. Firms that were not acquired eventually lost the entire 36 per cent return. But firms subsequently acquired, earned an additional 20 per cent return above the initial 36 per cent, earning shareholders a total return of 56 per cent. Those earnings compare favorably to the overall average return of 30 percent earned by shareholders & of all companies successfully acquired. These results suggest that some form of resistance by management may be desirable. Playing "hard to get" may influence the initial suitor to increase the bid, or it may permit time for competing bids to be submitted. It is possible, however, to have too much of a good thing. When management actions are designed solely to eliminate a takeover by a specific bidder, then shareholders may be harmed. Nevertheless, anti-takeover tactics do not deserve the blanket condemnation they receive in the press.Q.Which of the following, if true, would most seriously weaken the authors conclusion about the benefits of management resistance to takeovers?a)A third category of mergers, comprising firms that underwent several unsuccessful bids before being acquired, shows a rate of return to shareholders somewhere between the rates for the other two categories.b)When acquisitions are studied over a two-year period, companies that resisted takeover attempts show the same return to shareholders as companies that did not resist.c)The 56 per cent return to shareholders earned when companies are acquired after an unsuccessful takeover bid, is an average that includes companies whose stock declined in value as well as companies whose stock gained in value.d)Of the companies whose managements resisted acquisition attempts, about fifty per cent experienced an increase in stock prices and fifty per cent suffered a decrease in stock prices.e)Companies thatunsuccessfullyresisted turnover suffer setbacks later due to the reduced sale ability of their stock.Correct answer is option 'B'. Can you explain this answer? theory, EduRev gives you an ample number of questions to practice Directions: The passage below is followed by a question based on its content. Answer the question on the basis of what is stated or implied in the passage.The 1980s have come to be regarded as the decade of corporate consolidation in the United States, with the number of mergers and their dollar value both setting records. Many public forums have questioned, on both social and economic grounds, the merits of this takeover frenzy. Even more controversial than the mergers themselves, however, is the reaction of the management of target firms. No longer is management content to be passive or to put up minimal resistance in the face of an unwelcome takeover attempt. Indeed, the responses of target managements have become as imaginative as the methods used by the would–be acquirers. These so–called anti-takeover tactics have received nearly universal condemnation from government regulatory bodies, the financial press, and some academic publications. Why is there so much criticism when management resists takeovers? At the most general level, such criticism is based on studies that find a negative return to shareholders when a negotiated (friendly) merger is unsuccessful. These studies examine the cumulative return from the period just prior to the first public announcement of the proposed merger through the announcement of cancellation. Results range from a total return of –9.02 per cent to + 3.68 per cent, with an average of –2.88 percent. In unsuccessful mergers, therefore, stockholders in target firms lose on average nearly 3 per cent of the shares value.But looking at the returns only through the termination date can be misleading. Other studies examining the period from six months prior to an offer to six months after the offer have found that the total return averages nearly +36 per cent, even though the offer was unsuccessful. Given the typical stock market reaction to unsuccessful negotiated mergers, this is a curious finding. The explanation for this seeming anomaly emerges when firms are divided into two groups: those eventually acquired by some other bidder, and those not acquired. Firms that were not acquired eventually lost the entire 36 per cent return. But firms subsequently acquired, earned an additional 20 per cent return above the initial 36 per cent, earning shareholders a total return of 56 per cent. Those earnings compare favorably to the overall average return of 30 percent earned by shareholders & of all companies successfully acquired. These results suggest that some form of resistance by management may be desirable. Playing "hard to get" may influence the initial suitor to increase the bid, or it may permit time for competing bids to be submitted. It is possible, however, to have too much of a good thing. When management actions are designed solely to eliminate a takeover by a specific bidder, then shareholders may be harmed. Nevertheless, anti-takeover tactics do not deserve the blanket condemnation they receive in the press.Q.Which of the following, if true, would most seriously weaken the authors conclusion about the benefits of management resistance to takeovers?a)A third category of mergers, comprising firms that underwent several unsuccessful bids before being acquired, shows a rate of return to shareholders somewhere between the rates for the other two categories.b)When acquisitions are studied over a two-year period, companies that resisted takeover attempts show the same return to shareholders as companies that did not resist.c)The 56 per cent return to shareholders earned when companies are acquired after an unsuccessful takeover bid, is an average that includes companies whose stock declined in value as well as companies whose stock gained in value.d)Of the companies whose managements resisted acquisition attempts, about fifty per cent experienced an increase in stock prices and fifty per cent suffered a decrease in stock prices.e)Companies thatunsuccessfullyresisted turnover suffer setbacks later due to the reduced sale ability of their stock.Correct answer is option 'B'. 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