Question 1
In some ways monitoring is easier in a partnership than a corporation, where shareholders monitor directors. In what ways is monitoring easier? In what ways is it not?
Question 2
A friend convinces you that she has a great idea for business, and the two of you incorporate. You supply her with funds and let her make all of the executive decisions. Under the agreement you hold 30 percent of the firm's stock and your friend holds 70 percent. Why should you ever put yourself into a position where your friend's decision will carry the day, whether you agree with her or not? What does this tell you about problems that allegedly stem from separation of ownership and control?