All Else Equal, in Which of the Following Forms of Business

question 8

Multiple Choice

All else equal, in which of the following forms of business would the possibility of an agency problem be the greatest?

• A)A U.S. corporation in which individual stockholders own extremely small proportions of the company.
• B)A proprietorship in which the owner is actively managing the business operations.
• C)A partnership in which all the partners share management and decision-making responsibilities equally.
• D)A foreign corporation with concentrated ownership; that is, it has relatively few owners.
• E)A U.S. corporation that gives company shares as incentives to its managers.

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Definitions:

Assertive Decisions

Choices made confidently and firmly, demonstrating a clear stance without being aggressive, ensuring one's rights and needs are communicated effectively.

Knowledge Work

Refers to tasks that involve handling or using information, often requiring analytic skills, creativity, and intellectual effort.

Participative Decision Making

A decision-making process that involves all relevant parties or team members in order to make more encompassing and democratic decisions.

Creativity

The use of imagination or original ideas to create something; inventiveness.