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There is a tendency for CEOs of larger companies to earn more money than CEOs of smaller companies. Suppose a CEO decides to acquire another​ company, thus increasing the size of the​ CEO's firm. Suppose also that the price of the stock of the acquiring firm falls when it learns of the upcoming acquisition. This appears to be an example of​ ________.

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Nyctalus

Answer: a CEO pursuing profit maximization rather than wealth maximization

Explanation: In profit maximization the firms tries to set their price,output and cost in such a way that their profit level be maximized.

Wealth maximization can be described as the process under which the company works for increasing the value of shares in market.

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In the given case the CEO is purchasing new company for expanding business which could increase the potential benefits in future but these purchases are made from the retained earnings and other such funds of the company leading to decrease in wealth.