Company A has a large number of shareholders, with no single investor owning more than 50% of the outstanding shares. Company B is managed by a family who owns 60% of the outstanding shares. Both companies offer a single class with equivalent rights.

b. Determine the relative level of risk (high or low) of principal-agent problems being present at each company. Justify your viewpoints.

c. Outline and explain four drawbacks most likely associated with the ownership structure of Company B.

Answer rating: 100% (QA)

b The relative level of risk of principalagent problems being present at each company can be assessed as follows 1 Company A Since no single investor owns more than 50 of the outstanding shares the ow... View the full answer