Asked by Briana Arredondo on Jun 01, 2024
Verified
Which form of business structure faces the greatest agency problems?
A) Sole proprietorship.
B) General partnership.
C) Limited partnership.
D) Corporation.
E) Limited liability company.
Agency Problems
Conflicts of interest that arise when there's a separation between the management of a company and its owners.
Corporation
A legal entity that is separate from its owners, with the ability to own assets, incur liabilities, and conduct business.
- Identify the impact of financial decisions on problems related to agency and on the market worth of the company.
Verified Answer
DS
Dylan SpeicherJun 06, 2024
Final Answer :
D
Explanation :
Corporations face the greatest agency problems due to the separation of ownership and management. Shareholders (owners) often have little control over the managers (agents) who make decisions on their behalf, leading to potential conflicts of interest.
Learning Objectives
- Identify the impact of financial decisions on problems related to agency and on the market worth of the company.
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