Final answer:
The statement that corporations make it more difficult for investors to transfer ownership is false. Corporations offer easier transferability of ownership through the trading of stocks, which contrasts with the complex process required for changing partnership ownership.
Step-by-step explanation:
The statement that one disadvantage of forming a corporation rather than a partnership is that this makes it more difficult for the firm's investors to transfer their ownership interests is false. In fact, one of the key benefits of a corporation is the liquidity of its shares. Unlike partnerships, where transferring ownership can be complex due to the need for new partnership agreements, corporation stock can be bought and sold on the market easily if the company is public. This liquidity is appealing to investors as it allows them flexible entry and exit strategies.
Corporations provide limited liability for their shareholders and the ability to raise capital by selling stock or issuing bonds. These features make corporations an attractive business structure for both small and large investors looking to limit personal liability and participate in the company's profits (and losses). Conversely, partnerships may require significant effort and paperwork to add or remove partners, making ownership transfers more cumbersome.