Question

In a ____________, a target corporation uses news releases, advertisements, and press conferences to convince shareholders to retain present management.

1) greenmail arrangement
2) lockup agreement
3) public relations campaign
4) targeted shareholder agreement

Answer 1

A public relations campaign is used by a target corporation to persuade shareholders to support current management and protect against hostile takeovers through various communication methods.

Step-by-step explanation:

In a public relations campaign, a target corporation uses news releases, advertisements, and press conferences to convince shareholders to retain present management.

This strategy is part of a defensive tactic against takeovers, where management attempts to sway public opinion and shareholder sentiment to preserve their positions and fend off any hostile takeover attempts.

The use of a public relations campaign is to influence shareholders by communicating the value and future plans of current management, highlighting their successes, and often presenting potential risks associated with the change in management that a takeover could bring.