CIMA BA4 · Chapter 5 · Question 7 of 10
An 'insider' system of corporate ownership, common in parts of continental Europe and Asia, is characterised by which of the following?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Ownership concentrated in families, banks or other companies with close links to management
Explanation
Insider systems feature concentrated ownership by families, banks, other companies or founders who are close to management, which reduces some agency problems but can disadvantage minority shareholders. Outsider systems, typical of the UK and US, have widely dispersed shareholdings.
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