Carlos founded the "Taco Factory" 20 years ago as a family-oriented restaurant. Over the years as they grew the business, he incorporated and sold stock to outside investors. Recently the stockholders voted to seek liquor licenses and to sell beer and hard liquor in the restaurants. Carlos opposed this, citing the history of the restaurant's "family" environment, but was voted down. Carlos has experienced which drawback of the corporate form of ownership?
A)The inability to accumulate capital.
B)The potential for diminished managerial incentives.
C)Legal requirements and red tape.
D)The potential loss of control.

Question

Quizplus · Accepted Answer

The potential loss of control is a drawback of the corporate form of ownership, as seen in the scenario where Carlos is outvoted by the other stockholders.

Carlos Founded the "Taco Factory" 20 Years Ago as a Family-Oriented