The separation of corporate ownership and control removes most executive decisions from shareholder scrutiny, but offers an efficient division of labor between persons with differing skills, goals, and wealth.

Question

Quizplus · Accepted Answer

The statement accurately reflects the theory of separation of ownership and control, which posits that corporate ownership (shareholders) and control (management) are separate and distinct, allowing for efficient delegation of tasks and decision-making. While this separation may limit shareholder scrutiny of management decisions, it also enables managers to specialize in running the day-to-day operations of the company, while shareholders can focus on providing capital and expecting returns on their investment.

The Separation of Corporate Ownership and Control Removes Most Executive