Mergers Acquisitions and Corporate Restructurings 6th Edition by Patrick A. Gaughan – Test Bank

Questions: Chapter 11 – Corporate Restructuring

1. Which of the following are examples of pension-related employee benefit plans?
a. Defined benefit
b. Defined contribution
c. Profit sharing
d. All of the above

2. Kaplan and Weishbach found that diversifying deals were which of the following with respect to the likelihood of subsequent divestiture?
a. Four times more likely to be divested
b. Equally likely
c. Two times less likely
d. None of the above

3. Which of the following are common reasons cited for selling off prior acquisitions?
a. Poor fit
b. Poor performance
c. Cash flow needs
d. All of the above
e. None of the above

4. Which of the following studies showed positive shareholder wealth effects for sell-offs?
a. Cusatis, Miles, and Wooldridge
b. JP Morgan
c. Kudla and McInish
d. All of the above
e. Both a and c

5. Involuntary divestitures generally have what effects?
a. Positive
b. Negative
c. No consistent effects
d. None of the above

6. The sell-offs by Starwood following its acquisition of Taittinger were motivated by:
a. Eliminating a nonstrategic component
b. Eliminating a poorly performing unit
c. Raising cash to pay off debt
d. None of the above

7. The following describes reverse synergy:
a. 2 + 2 = 5
b. 2 + 2 = 4
c. 4 – 1 = 5
d. none of the above

8. The sale of Miller by Altria accomplished what:
a. Narrowed Altria’s strategic focus
b. Improved Altria’s overall financial performance
c. Enabled Inbev to gain market share
d. All of the above
e. Both a and b
f. Both a and c

9. In the United States, in order for a spin-off to be nontaxable, the following must be the case:
a. Both the parent company and the spun-off entity must be in business for at least five years before the restructuring.
b. The subsidiary must be at least 80% owned by the parent company.
c. The parent company and the spun-off entity must be in the same industry
d. Both a and b
e. Both b and c

10. Asian spin-off volume:
a. Historically follows the same pattern as the U.S. spin-off volume
b. Followed the same pattern as European spin-off volume
c. Has declined in the past when spin-offs rose in European and the United States
d. None of the above

Answers: Chapter 11

1. d
2. a
3. d
4. d
5. b
6. a
7. c
8. e
9. d
10. c