One advantage of switching from a partnership to the corporate form of organization is the following: Group of answer choices It subjects the firm to less regulations. It makes it easier for the firm to raise additional capital. It makes the firm's investors subject to greater potential personal liabilities. It makes it more difficult for the firm's investors to transfer their ownership interests.

One advantage of switching from a partnership to the corporate form of organization is the following: Group of answer choices It subjects the firm to less regulations. It makes it easier for the firm to raise additional capital. It makes the firm's investors subject to greater potential personal liabilities. It makes it more difficult for the firm's investors to transfer their ownership interests.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter1: The Role And Objective Of Financial Management

Section: Chapter Questions

Problem 5QTD

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Which of the following statements is most correct? O Managers who face the threat of hostile takeover are less ikely to pursue policies that maximize shareholder value compared to managers who do not face the threat of hostile takeover. O Because of their size, it is easier for sole proprietorships and partnerships to raise outside capital than it is for a corporation. O Corporations face fewer regulations and taxes relative to sole proprietorship and partnership. O Corporations are taxed more favorably than sole proprietorships. O One advantage to form a corporation is that the owners of the corporations have limited liability
Advantages of the corporate form of business, over other forms, include all of the following except: O Lower costs of separation of owners from managers, or so-called "agency costs." O Greater ease of raising capital. O Limited liability of the shareholders for corporate misdeeds. O Greater liquidity of ownership interests. O Greater ability to hire talented management.
What is the important question of corporate finance when a finance manager advises the company’s management to accept or reject a long-term investment project? What the finance manager needs to analyse to justify her/his adviceHow a corporation is different from a partnership in terms of owner, legal status, liabilities, life, regulation, access to capital, taxation and transfer?
Which of the following is an incentive for firms to conduct an IPO? Underwriter and advisor fees are typically substantial. Venture capitalists will be more able to sell their shares. Reporting requirements are more stringent for public companies. The company may become subject to a hostile takeover.
Suppose you need additional capital to expand,and you sell some stock to outside investors. If youmaintain enough stock to control the company,what type of agency conflict might occur?
Firms must provide the right incentives if they are to get -Select-shareholderscreditorsmanagersItem 1 to focus on long-run value maximization. Conflicts exist between managers and stockholders and between stockholders (represented by managers) and -Select-employeesdebtholderscustomersItem 2 . Managers' personal goals may compete with shareholder wealth maximization. However, managers can be motivated to act in their stockholders' best interests through (1) reasonable -Select-vacationcompensationperquisiteItem 3 packages, (2) firing of underperforming managers, and (3) the threat of hostile takeovers. If a firm's stock is undervalued, corporate raiders will see it as a bargain and will attempt to capture the firm in a hostile takeover.-Select-StockholdersBondholdersItem 4 generally receive fixed payments regardless of how well the firm does, while -Select-stockholdersbondholdersItem 5 earn higher returns when the firm's earnings are higher. Investments in -Select-riskysafeItem…
Independent business units are a common choice for corporate ventures, but what is a significant drawback? A. Isolation of risk to the corporation B. Require less direct monitoring OC. Allow venture to focus D. Sharing resources and personnel
Which of the following statements is CORRECT? Select one: a. Conflict of interest between shareholders and managers is not possible. b. By definition, the agency problem can only take place in corporations but not in proprietorships and partnerships. c. Conflict of interest between shareholders and bondholders is not possible. d. Managers always work to maximize the long-run value, and therefore the price, of their company stocks. This is exactly what shareholders desire.
We can imagine the financial manager doing several things on behalf of the firm's stockholders. For example, the manager might: Make shareholders as wealthy as possible by investing in real assets. Modify the firm's investment plan to help shareholders achieve a particular time pattern of consumption. Choose high- or low-risk assets to match shareholders' risk preferences. Help balance shareholders' checkbooks. But in well-functioning capital markets, shareholders will vote for only one of these goals. Which one? Why?
Private equity firms improve the performance of firms in which they invest by: making sure that the firms have the best possible management teams. closely monitoring each firm's performance and providing advice and counsel to the firm's management team. facilitating mergers and acquisitions that help improve the competitive positions of the companies in which they invest. All of the above are correct.
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