Question

Which of the following forms of business organization is likely to suffer most from the principal agent problem between the owners and managers of the business:

A. Partnerships
B. Corporations
C. Proprietorships
D. All are equally likely to suffer from the principal-agent problem

PLEASE HELP! thank you!,

Answer 1

The form of business organization which is likely to suffer most from the principal agent problem between the owners and managers of the business is the corporation. It is a group of people authorized to act as one entity that is recognized by the law.