In which form of business organization is a agency problem most likely to occur?

Question

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A corporation is a separate legal entity from its owners, which can make it challenging to align the interests of shareholders with the interests of management. This separation can create an agency problem, where managers may prioritize their personal goals over the goals of shareholders. Shareholders may lack control over management decisions, leading to conflicts of interest and potentially reducing the value of the company. In other types of business organizations, such as sole proprietorships and partnerships, the owners typically have a more direct role in management, reducing the potential for agency problems. Limited liability companies (LLCs) have more flexibility in their organizational structure, which can address agency problems through specific agreements and provisions. However, corporations are still the most likely to encounter agency problems.

In Which Form of Business Organization Is a Agency Problem