CFA Level I · CFA Level I Exam · Organizational Forms, Corporate Issuer Features, and Ownership
A controlling shareholder who holds 55% of a company's voting shares causes the company to buy services from another firm she owns at above-market prices. This situation is most likely an example of a conflict between:
This is a conflict between controlling and minority shareholders. The controlling owner uses her voting power to direct business to her own firm at above-market prices, extracting private benefits while minority shareholders bear the cost through lower company value.
- Acreditors and managers
- Bcontrolling shareholders and minority shareholdersCorrect
- Cmanagers and employees
Explanation
The controlling shareholder extracts private benefits through related-party transactions at the expense of minority shareholders, who bear the cost. Creditors and employees are not the parties primarily harmed here.
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