One argument for why subsidiaries should be allowed to issue their own stock is that:
A) it prevents a potential conflict of interests between the MNC's managers and shareholders.
B) it prevents a potential conflict of interests between the MNC's majority shareholders and minority shareholders.
C) it prevents a potential conflict of interests between the MNC's existing creditors.
D) having local investors as minority shareholders may offer some protection against adverse actions by the local government.

Question

One argument for why subsidiaries should be allowed to issue their own stock is that:​
A) ​it prevents a potential conflict of interests between the MNC's managers and shareholders.
B) ​it prevents a potential conflict of interests between the MNC's majority shareholders and minority shareholders.
C) ​it prevents a potential conflict of interests between the MNC's existing creditors.
D) ​having local investors as minority shareholders may offer some protection against adverse actions by the local government.

Quizplus · Accepted Answer

All other choices are incorrect or incomplete. Allowing subsidiaries to issue their own stock can create a sense of ownership and accountability among local investors, which in turn may offer protection against adverse actions by officials of the local government.

One Argument for Why Subsidiaries Should Be Allowed to Issue