PRC-3 · Chapter 2 · Question 60 of 61
In a massive listed public company, there are thousands of shareholders, but the daily operations are run by hired professional managers. This crucial concept, which can sometimes lead to conflicting goals, is known as the:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) Separation of ownership and control
Explanation
Large corporations experience a separation of ownership (the shareholders) and control (the management), which forms the basis of corporate governance challenges (the agency problem).
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