Which of the following statements is CORRECT?
A) A good goal for a firm's management is maximization of expected EPS.
B) Most business in the U.S.is conducted by corporations, and corporations' popularity results primarily from their favorable tax treatment.
C) Because most stock ownership is concentrated in the hands of a relatively small segment of society, firms' actions to maximize their stock prices have little benefit to society.
D) Corporations and partnerships have an advantage over proprietorships because a sole proprietor is exposed to unlimited liability, but the liability of all investors in the other types of businesses is more limited.
E) The potential exists for agency conflicts between stockholders and managers.

Question

Quizplus · Accepted Answer

The statement is correct that agency conflicts can arise between stockholders and managers. This is because managers may have different incentives and goals than the stockholders, leading to potential conflicts of interest.

Which of the Following Statements Is CORRECT