Are hostile takeovers necessarily bad for firms or theirinvestors? Explain.

(Select the best choice below.)

A. Yes. They allow new investors to profit at the expense of employees and existing investors. If existing investors and employees were better off being takenover, there would be no reason for the takeover to be hostile.

B. No. They are a way to discipline managers who are not working in the interests of shareholders.

C. Yes. They allow the entity taking over, the raider, to make a quick profit. This profit must come from somewhere. The only place is existing shareholders and employees, so hostile takeovers must be bad for existing shareholders.

D. Both (A) and (B) are correct answers.