Question

Which of the following statements is CORRECT? a. Because most stock ownership is concentrated in the hands of a relatively small segment of society, firms' actions to maximize their stock prices have little benefit to society. b. Corporations and partnerships have an advantage over proprietorships because a sole proprietor is exposed to unlimited liability, but the liability of all investors in the other types of businesses is more limited. c. A good goal for a firm's management is maximization of expected EPS. d. The potential exists for agency conflicts between stockholders and managers. e. Most business in the U.S. is conducted by corporations, and corporations' popularity results primarily from their favorable tax treatment.

Answer 1

Answer:

d. The potential exists for agency conflicts between stockholders and managers.

Explanation:

• A problem of the agency is a conflict of the interest of relationships where one party is expected to act in another best interest and usually refers to the conflicts of the interest between the companies management and the stockholders.