One argument for why subsidiaries should be wholly owned by the MNC parent is that parent ownership avoids a potential conflict of interest between the:
A) parent's managers and board of directors.
B) parent and managers at the subsidiary who are minority shareholders.
C) parent and existing creditors.
D) subsidiary's managers and creditors.

Question

Quizplus · Accepted Answer

If the subsidiary is not wholly owned by the MNC parent, there may be a conflict of interest between the parent and the managers at the subsidiary who are minority shareholders. The managers may prioritize their own interests over the interests of the parent company, leading to suboptimal decision making and potential negative impact on the overall MNC. By owning the subsidiary entirely, the parent company can avoid this conflict and ensure alignment of interests between the subsidiary and the parent.

One Argument for Why Subsidiaries Should Be Wholly Owned by the MNC