I ran into the same exact problem. B is clearly stated whereas D is the implied meaning. My initial doubt in answer choice D was that it mentions an increase in compensation for executives, whereas the passage doesn't mention any increase, per se. That's where I revisited the question and saw that it must've been an implied answer, and that led me back to D.

Not sure why the heck B works here better than D does.

The problem with (D) is that there is no evidence in the passage that there was such an increase. Perhaps if we were told that mergers and acquisitions INCREASED during that period we could speculate that the increase may have been partially caused by an increase in total compensation packages for managers.

But all we are told is that we are looking at studies on corporate mergers and acquisitions during the 1970s and 1980s. We are told that "mergers and acquisitions remain common," but there is nothing to suggest that mergers and acquisitions increased during that time.

As for your concern with choice (B), I think this post will help.
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Got 2 incorrect(Q Nos 3 & 4) out of 7 . Time - 10mins 13 secs
Though i realised that for Question no 3, i marked wrong choice after i chose answer. Was able to drop down to C and E choice.
However for question no 4. , I am not clear. The question reads as

The author of the passage mentions the effect of acquisitions on national economies most probably in order to

(A) provide an explanation for the mergers and acquisitions of the 1970s and 1980s overlooked by the findings discussed in the passage
(B) suggest that national economic interests played an important role in the mergers and acquisitions of the 1970s and 1980s
(C) support a noneconomic explanation for the mergers and acquisitions of the 1970s and 1980s that was cited earlier in the passage
(D) cite and point out the inadequacy of one possible explanation for the prevalence of mergers and acquisitions during the 1970s and 1980s
(E) explain how modeling affected the decisions made by managers involved in mergers and acquisitions during the 1970s and 1980s

Now A is out because of the "Overlooked by the findings"
B is out because of too narrow interest. Just before the statement, it says M&A are common and firms bid.
C looks a good option because the author specifically says about corporate economic benefits and thing having little do with corporate economic benefits explains acquisitions. So i thought , the author brought that out primarily in order to discuss non economic and little benefits as mentioned in the passage in the last second sentence
D . Could not related.
E. Irrelevant

I marked C however OA is D. Can experts shed some light into this?

GMATNinja and VeritasKarishma

Thanks
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Thank you . I reread the whole passage again and now i got where i got wrong with the help of your summary. Its difficult to comprehend in such a hurry. There are many gimmicks flying on the internet saying this and that strategy . But i think it ultimately boils down to one's reading and comprehending skills , the fact which GMATNinja has been stressing about in his every videos of RC. Thank you for the in-depth analysis of the passage.
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In ques no 66. the correct choice is given as:
(E) Factors other than economic benefit to the acquiring firm help to explain the frequency with which they occur.
But the passage quotes "It seems that factors having little to do with corporate economic interests explain acquisitions." which gives the reason that there were factors
other than economic interests responsible for such acquisitions.
But nowhere it suggests the frequency with which they occurred.
whereas in option
(A) Their known benefits to national economies explain their appeal to individual firms during the 1970s and 1980s.
This can be inferred from the second part of the opening sentence or Para2, which suggests that the acquisition executives see the national's economic interests advancing their own companies economic interest (they believed what is good for nation will be good for their company)


In ques no 64. the correct choice is given as:
(C) report findings that raise questions about a reason for corporate mergers and acquisitions and suggest possible alternative reasons
But there is only one alternative reason cited in the passage " but the individual acquisitions executives arranging these deals must see them as advancing either their own or their companies??? private economic interests."

whereas option
(B) contrast the effects of corporate mergers and acquisitions on acquiring firms and on firms that are acquired
This option is discussed more widely in the whole passage.

Experts, kindly help.

Hi rocky620,

For Question 64:
B is incorrect because no such contrast about the effects of corporate mergers and acquisitions can be inferred from the passage. The passage simply discusses two studies and questions the findings from several studies on corporate mergers and acquisitions about why firms initiate and consummate such transactions. Thus C is the better answer.

For Question 66, please refer the answer by expert:
https://gmatclub.com/forum/findings-from-several-studies-on-corporate-mergers-and-acquisitions-du-161474.html#p1982125

Let me know if you still have doubts.
Thanks.

bm2201 I got 64.

But for ques 66, the word "frequency",in option (E) Factors other than economic benefit to the acquiring firm help to explain the frequency with which they occur", has no connections in the passage. The factors are only mentioned as a reason for less profitable/failed M&A, not for frequency of occurance. Thats why i eliminated this choice.

For option "(A) Their known benefits to national economies explain their appeal to individual firms during the 1970s and 1980s." the author is suggesting a course of action to avoid a failure (as mentioned in the beginning of second para). Doesn't that means that the current process ( basing the M&A on national economic interests) is incorrect? and hence option A?

GMATNinja VeritasKarishma

Need help in Q70. Why are Options A and D are wrong?

I'm still not really grasping Q4 (67). I just don't see how the passage is using the "positive effects of garnered from diverting funds accross different sectors of the national economy" as an explanation as to why M&A were prevalent.

Good Afternoon Expert.

I need your expertise to explain question no 5 to me as the information in the passage states that " Following the announcement of a prospective merger, the stock of the prospective acquiring firm tends to increase in value much less than does that of the firm for which it bids." It means that the stock price of a firm is compared with the firm it acquires. It does not necessarily mean that the stock price of the company will fall.

THere is possiblity that stock price of the acquiring firm increases more as compared to when merger was announced.

Please help me on this. Many thanks in advance.

Hi fireagablast,

Please refer the below replies by experts here:
https://gmatclub.com/forum/findings-from-several-studies-on-corporate-mergers-and-acquisitions-du-161474.html#p1280035
https://gmatclub.com/forum/findings-from-several-studies-on-corporate-mergers-and-acquisitions-du-161474-20.html#p2549770


Let us know if you still have doubts.

Thanks.

Hi RahulHGGmat,

There is a possibility of what you are suggesting, but we need to consider only what's mentioned in the passage:

"A third demonstrated that, following the announcement of a prospective merger, the stock of the prospective acquiring firm tends to increase in value much less than does that of the firm for which it bids. Yet mergers and acquisitions remain common, and bidders continue to assert that their objectives are economic ones.", thus implying that bidding firms experienced less of an increase in stock value when a prospective merger was announced.

I suppose you want to know, why is A incorrect? It is incorrect because no such inference can be drawn from the passage.

Let me know if you still have doubts.

Thanks.

I didn't pick the right answer in the first question (c) because nowhere in the passage is stated or suggested that the author is questioning a particular reason as to why the mergers and acquisitions are made:

"C) Report findings that raise questions about a reason for corporate mergers and acquisitions and suggest possible alternative reasons"

souldn't the answer read "Report findings that raise questions about some reasons for corporate mergers and acquisitions and suggest possible alternative reasons"?

Even the official explanation as to why C is correct reads "C Correct. The passage surveys reports that question the reasons given by firms when they acquire other firms and suggests other reasons for these acquisitions"

So, can someone help me understand why answer C isn't wrong?

Thank you GMATninja for your reply, I understand that the author lists a number of studies to call into question if the mergers and acquisitions made by companies truly have an economic advantage. Maybe I'm being too rigid with the language but my doubt arose from the fact that the author is using plural in the last sentence of the last paragraph: "Yet mergers and acquisitions remain common, and bidders continue to assert that their objectives are economic ones.". "their objectives are economic ones" sound to me like there are more than one reason, so, I guess we have to consider that these "objectives" are grouped into a single reason, as if to say: "The reason for the mergers and acquisitions is to safeguard the economic interests of the companies"?

This is a lovely passage, and teaches you a lot. I just want to highlight an inconsistency I am having a hard time reconciling.

For Q68, while E of course seems quite the right one, I can't seem to ditch C clearly, given the info in the last line of the passage. Doesn't that indicate the bidders tend to exhibit herd behaviour (managers doing what other managers do)?

Hi wishmasterdj,



The last line of the passage, " Alternatively, the acquisition acts of bidders may derive from modeling: a manager does what other managers do.", is not comparing the managers of the bidding firms to the firms they bid for. It is simply a generic statement, but in Question 68, we are asked how did the bidding firms differed from the firms for which they bid, and for that E is the correct answer.

Hope This Helps.
Thanks.

Canyou please explain why A is not the answer, although I perfectly understand how B is qualifying to be the answer but why not A

Hi Poojita

Option (A) states: Managers wished to imitate other managers primarily because they saw how financially beneficial other firms’ acquisitions were.

However, the passage tells us only half of this statement ie; "a manager does what other managers do".

We do not know if a manager imitates because she sees the profitability of acquisitions done by other managers. The imitation could be due to any number of reasons. It could also be imitation just for the sake of imitation ie; a manager does acquisitions just because other managers do them and for no other reason (going by the passage, this last case is probably what is implied by the passage).

Hence, option (A) is not entirely true, and cannot be the correct answer. Hope this helps.
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