Microsoft PowerPoint - lecture 9 - corporate structure, PDV

Microsoft PowerPoint - lecture 9 - corporate structure, PDV...

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1 of 27 Types of Firms LEARNING OBJECTIVE 1 Sole proprietorship A firm owned by a single individual and not organized as a corporation. Partnership A firm owned jointly by two or more persons and not organized as a corporation. Corporation A legal form of business that provides the owners with limited liability. of 27 Types of Firms Who Is Liable? Limited and Unlimited Liability Asset Anything of value owned by a person or a firm. Limited liability The legal provision that shields owners of a corporation from losing more than they have invested in the firm. of 27 Types of Firms Who Is Liable? Limited and Unlimited Liability • Costly to organize • Possible double taxation of income • Unlimited personal liability • Limited ability to raise funds • Unlimited personal liability • Limited ability to raise funds Disadvantages • Limited personal liability • Greater ability to raise funds • Ability to share work • Ability to share risks • Control by owner • No layers of management Advantages CORPORATION PARTNERSHIP SOLE PROPRIETORSHIP Differences among Business Organizations 7 – 1 of 27 What’s in a “Name"? Lloyd’s of London Learns about Unlimited Liability the Hard Way 7 - 1 Investors in Lloyd’s of London lost billions of dollars during the 1980s and 1990s. of 27 Types of Firms Corporations Earn the Majority of Revenue and Profits 7 - 1 Business Organizations: Sole Proprietorships, Partnerships, and Corporations of 27 The Structure of Corporations and the Principal-Agent Problem LEARNING OBJECTIVE 2 Corporate governance The way in which a corporation is structured and the impact a corporation’s structure has on the firm’s behavior. Corporate Structure and Corporate Governance
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Microsoft PowerPoint - lecture 9 - corporate structure, PDV...

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