An MNC may be more exposed to agency problems if most of its shares are held by:
A) a few mutual funds.
B) a widely dispersed set of individual investors.
C) a few pension funds.
D) All of these would prevent agency problems.

Question

Quizplus · Accepted Answer

If most of the shares of an MNC are held by a widely dispersed set of individual investors, it may lead to agency problems as it becomes difficult to monitor the actions of management and ensure that they act in the best interest of the shareholders. In contrast, if most of the shares are held by a few mutual funds or pension funds, the chances of agency problems are lower as these institutional investors may have more resources to monitor and influence management. However, none of these options completely prevent agency problems.

An MNC May Be More Exposed to Agency Problems If