Divorce Between Ownership and Control

• What is the term used to describe the separation between ownership and control in businesses?

  Divorce between ownership and control
• Why does the divorce between ownership and control occur in larger businesses?

  Shareholders do not control day-to-day decisions
• Who typically makes the day-to-day decisions in a business?

  Management and the board of directors
• How do shareholders typically participate in decision-making in large companies?

  They delegate responsibility to management
• What must the board of directors have to align their interests with shareholders?

  Financial rewards and incentives
• What are the key components of corporate governance procedures?

  • Aligning board incentives with shareholder interests
  • Ensuring transparency in decision-making
  • Establishing accountability for management actions
• What role does company law play in the context of ownership and control?

  It ensures directors act in shareholders' best interests
• What is the main concern when there is a divorce between ownership and control?

  Proper management of the business
• What is the significance of the term "divorce between ownership and control" in corporate governance?

  It highlights the separation of decision-making authority