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Read paragraph below and respond to it. After reading the Antitakeover chapter, the management entrenchment versus stockholder interests hypothesis intrigued me as two theories that

Read paragraph below and respond to it.

After reading the Antitakeover chapter, the management entrenchment versus stockholder interests hypothesis intrigued me as two theories that can entirely shape the management outlook on preventative and active antitakeover methods. If the stockholders experience a reduction in wealth due to the measures taken to prevent a hostile takeover this indicates the management entrenchment hypothesis is in effect. The entrenchment hypothesis proves to management their attempts to dampen ventures to take control of the organization have failed and are proven to be a replaceable expense. However, in terms of the active and preventative measures leading to an increase in shareholder wealth, this falls in line with the shareholder interests hypothesis. This indicates management has justified their actions of preventative measures and will lead to cost-savings as management does not need to expense resources to prevent a takeover. With this being said, management will utilize these antitakeover defenses to their advantage by leveraging this cost reduction and shareholder value in the bidding process. If you were in management would you take precautions in the antitakeover measures to prevent and actively defend against hostile bidding? What measures would you take?

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