Question

Discuss to these reason (1-no residual claimant 2- no sence of ownership 3- no capital risk) why entrepreneur has less conflict compared to manager and shareholders.

Other than these 3 reason, please provide 2 more reason for us to study. ( Please make detail information for us ) Thank you

Answer 1

Entrepreneur has less conflict compared to manager and shareholders as -

1.No residual claimant as entrepreneurs are highly risk taking individuals and there are no ownership entitlement risk as well . They entirely own the business and they have no fear of any claim.

2. No sense of ownership as entrepreneurs are more motivated towards growth of the entity than owning it so they can even dissolve it to a higher extent.

3.No capital risks as they don't have their own capital invested into the business and they take measured high risks.

4. Less intervention of large number of shareholders as there are a hardly few venture capitalists.

5. They have lesser disclosure requirements in comparison to managers who are working in listed entities.