Which of the following statements about the separation of ownership and control are true?

Understanding Business
12th Edition
ISBN:9781259929434
Author:William Nickels
Publisher:William Nickels
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
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Which of the following statements about the separation of ownership and control are true?
When the ownership and control of a firm is separated, the owners become the residual claimants.
Managers always work to maximize the firm's profit.
It is effective for shareholders to monitor the performance of the management, in a firm owned by
a large number of shareholders.
One way to address the problem associated with the separation of ownership and control is to pay
the managers extremely high salaries
Transcribed Image Text:Which of the following statements about the separation of ownership and control are true? When the ownership and control of a firm is separated, the owners become the residual claimants. Managers always work to maximize the firm's profit. It is effective for shareholders to monitor the performance of the management, in a firm owned by a large number of shareholders. One way to address the problem associated with the separation of ownership and control is to pay the managers extremely high salaries
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