Which form of business structure is most associated with agency problems?
A)sole proprietorship
B)general partnership
C)limited partnership
D)corporation
E)limited liability company

Question

Quizplus · Accepted Answer

The corporation is most associated with agency problems because it has a complex ownership structure with separation of ownership and management. The principal-agent problem arises because managers may be motivated to act in their own interest rather than in the interest of the shareholders, who are the owners of the corporation. This creates a conflict of interest, which is the root of agency problems.

Which Form of Business Structure Is Most Associated with Agency