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Determine the relative level of risk

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Question - 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.

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

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

Reference no: EM133100977

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