Researchers point to the decades of the 1960s and 1970s as a period wh

Researchers point to the decades of the 1960s and 1970s as a period when internal capital markets may have been superior to external capital markets in the U.S.

To test this argument, Hubbard and Palia (1999) examined 392 bidding firms involved in mergers in the 1960s. Those bidders that realized the highest returns from merger were cases in which the bidding firm was financially (i) while the target firm was financially (ii).
(i) (ii)
a. constrained unconstrained
b. unconstrained constrained

ANSWER

B