Question

separation of ownership with the management of a company may leads to​

Answer 1

Answer:

In joint stock company there is separation of ownership and management and it involves placing the management of the firm under the responsibility of professionals who are not its owners. Owners of a company may include shareholders, directors, government entities and initial founders.

Answer 2

Explanation:

In 1932, Adolphe Berle and Gardiner Means published a book that would have a huge impact in the vision of corporate ownership. In ‘The Modern Corporation and Private Property’, it has been argued that US modern public corporations are subject to a separation between ownership and control. Accordingly, shareholders have only a passive role in the direction of the corporation due to their very little influence in the decision-making. Therefore, control is left to the managers giving them the free charge of running the corporation.

In Berle and Means’ view, the separation of ownership and control can be explained by two main factors. Accordingly, the higher and higher rise of public corporations and dispersed ownership has contributed to the fact that no one shareholder has enough shares to be able to control the company. Further, shareholders have only few opportunities in the case of a board’s election. He can refrain from voting, he can attend the annual meeting and vote his stock, or he can sign a proxy transferring his voting power to certain individuals selected by the management of the corporation, the proxy committee. As a matter of fact, Berle and Means have outstandingly demonstrated the large passivity characterising the role of shareholders in modern corporations.