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Why jable risk-averse shareholders demanded

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Reference no: EM132434441

Problem: In the early 2000s, Jable, a large automotive parts manufacturer, was hoping to be one of the major beneficiaries of increased contracting out in the automotive sector. Through its various subsidiaries and divisions Jable made just about everything you might need to put together a car, van, or truck. However, it also had significant interests in real estate and race tracks.

Required:

1. Explain why Jable's risk-averse shareholders demanded the break-up of Jable into two separate companies - an auto parts manufacturer and a real-estate entertainment company, while Jable's risk-averse management initially resisted calls to break up the company.

2. What attitude toward risk were shareholders asking Jable International management to exhibit? What do economists call this problem between managers and shareholders?

Reference no: EM132434441

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