Question
Firm A and firm B are considering a merger. Both firms have the exact same characteristics except that the dividend yield of firm B is
Firm A and firm B are considering a merger. Both firms have the exact same characteristics except that the dividend yield of firm B is higher than the one of firm A. The CEO of firm A argues, "this is going to an excellent opportunity for our existing shareholders. After the merger, they can expect higher dividend yield. Letting them have the cash is better than the company retaining the earnings for growing the business."
Briefly comment on the CFO's argument.
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Smith and Roberson Business Law
Authors: Richard A. Mann, Barry S. Roberts
15th Edition
978-0538473637
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