In most large corporations, ownership and management are separated. What are the main implications of this...

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In most large corporations, ownership and management are separated. What are the main implications of this...

In most large corporations, ownership and management are separated. What are the main implications of this separation?

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Answer 1

Answer #1

This makes corporations sustainable/permanent as ownership can easily transfer to another shareholder and corporation also continues even when managers quit or are replaced.

Management by a team if professionals as owners might not have all necessary skills needed for management.

Capital utilisation gets maximized.

Agency problems, where managers prefer consumption of private perks / make other decisions for private benefit—rather than maximization of shareholder wealth.

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Answer 2

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a) How does the separation of ownership and management in most C Corporations lead to agency...

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In most large corporations, ownership and management are separated. What are the main implications of this...

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