A business that is owned and managed by same entity is

Question

Quizplus · Accepted Answer

When a business is owned and managed by the same entity, there is no separation of ownership and control, which decreases the likelihood of agency problems. Agency problems can arise when the interests of the owners (shareholders) and managers are not aligned, but when the same entity owns and manages the business, the interests are the same. Option A is incorrect as the business in question is not a family business that has gone public. Option B is incorrect as agency problems are less likely when there is no separation of ownership and control. Option D is incorrect as there is no requirement to offer ownership shares to professionally hired managers if the business is owned and managed by the same entity.

A Business That Is Owned and Managed by Same Entity