All else equal, in which of the following forms of business would the possibility of an agency problem be the greatest?
A)An U.S.corporation that is publicly traded.
B)A proprietorship.
C)A partnership in which all the partners share management and decision-making responsibilities equally.
D)A foreign corporation with concentrated ownership that is, relatively few owners.

Question

Quizplus · Accepted Answer

In a publicly traded corporation, there is a separation between ownership (shareholders) and management (board of directors and executives), which increases the possibility of an agency problem. Shareholders may not have direct control over the decisions made by management, leading to potential conflicts of interest and misaligned incentives.

All Else Equal, in Which of the Following Forms of Business