Explain the Reasons for Separating Ownership and Management in All

question 22

Essay

Explain the reasons for separating ownership and management in all large organizations.

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Definitions:

Stock Offering

The process by which a company issues its stocks to investors to raise capital, often referred to as equity financing.

Entrepreneur

An individual who creates, organizes, and operates a business or businesses, taking on greater than normal financial risks in order to do so.

Venture Capitalist

An investor who provides capital to startups or small companies looking to expand, in exchange for equity stakes.

Closely Held

Closely held companies are usually small, owned by a small number of people, typically managers and their common shares are not actively traded.