What is the primary reason for over diversification

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1. What is the primary reason for over diversification? Is it industrial policies, such as taxes and antitrust regulation, or do firms over diversify because managers pursue their own self-interest through increased compensation, and a reduced risk of job loss? Why?

2. Is it ethical for managers to diversify a firm rather than return excess earnings to shareholders? Support your answer.

3. What are three reasons that firms choose to diversify their operations?

4. What are the two ways to obtain financial economies when using an unrelated diversification strategy?

5. What motives might encourage managers to over diversify their firms?

Reference no: EM132388083

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