Question

what do we mean by the separation of ownership from control in large corporations?
a. shareholders control the corporation, but it is owned by managers.
b. shareholders own the corporation, but it is controlled by the government.
c. shareholders own the corporation, but it is controlled by managers.
d. shareholders control the corporation, but it is owned by the government and by taxpayers.

Explanation:

In large corporations, shareholders own the company (by holding shares). However, day - to - day operations and control are in the hands of managers. Managers make decisions regarding business operations, strategy implementation etc. while shareholders have ownership rights (like voting rights in major decisions but not daily control).

• Option A is incorrect because shareholders own the corporation, not managers.
• Option B is incorrect as corporations (in the context of separation of ownership and control in general corporate structure) are not controlled by the government (unless in specific cases of government - owned corporations which is not the general case here).
• Option D is incorrect as shareholders own the corporation (not the government and taxpayers in the general sense of a private corporation) and they do not have day - to - day control.

Answer:

C. Shareholders own the corporation, but it is controlled by managers.