Which form of business structure faces the greatest agency problems?
A)Sole proprietorship
B)General partnership
C)Limited partnership
D)Limited liability company
E)Corporation

Question

Quizplus · Accepted Answer

Corporations face the greatest agency problems since they have a separation of ownership and management. The shareholders own the company, but the managers run the day-to-day operations. This separation can create conflict between the two parties as they may have different objectives and priorities. Additionally, shareholders may not have enough control to ensure that managers act in their best interests, leading to potential agency costs.

Which Form of Business Structure Faces the Greatest Agency Problems