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Comment on the following statement. As management knows more about the day-to-day running of the company...

Comment on the following statement. As management knows more about the day-to-day running of the company than shareholders, shareholders should always follow management's lead in rejecting a takeover bid that management says is against the best interests of shareholders.

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Answer #1

An average share holder is typically not involved in the day to day activities of the company and relies on the management of the company to protect his interests. Generally management includes parties like employees, executives and board of directors of the company.

Board of directors are elected by the shareholders and are responsible for protecting and managing the shareholder's interests on the company.

Although average shareholder doesnot have control over the board of directors or the day to day operations, the ultimate responsibility for the protection of stakeholders value lies with the individual investors.

So when deciding on the decisions related issues like takeover bids shareholders shlould take due care and analysis and follow the management's lead as they are much aware of the day to day operations and the effects of such takeovers

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