Carlos founded the "Taco Factory" 20 years ago as a family-oriented restaurant business.Over the years as he grew the business,he incorporated and sold stock.Recently the stockholders voted to seek liquor licenses and 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 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 the most suitable answer as Carlos was outvoted by the stockholders on a crucial decision despite being the founder of the company. This is a common drawback of the corporate form of ownership where ownership and control are separated, and shareholders have the power to make decisions without the consent of the founder or CEO.

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