Asked by
Jacqueline Winston
on Oct 16, 2024Verified
Which of the following is not a reason why a parent company would prefer to be involved with an NCI?
A) Reduction on ownership risk
B) Potential for increased share dilution
C) Maintenance of a market for the subsidiary's shares
D) Potential links to resources such as government support and management expertise
Ownership Risk
The risk of loss in value or return on investment due to changes in ownership structure or disputes over property rights.
Share Dilution
A reduction in existing shareholders' ownership percentage caused by the issuance of new shares.
Government Support
Financial or non-financial aid provided by the government to businesses, industries, or individuals in forms such as grants, loans, or tax incentives.
- Distinguish the motives for securing less than a 100% stake in a subsidiary.
Verified Answer
MM
Learning Objectives
- Distinguish the motives for securing less than a 100% stake in a subsidiary.