AMaheshwari_BUS540-LH_Module06_05-06-2011

AMaheshwari_BUS540-LH_Module06_05-06-2011 - Module 6 1...

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Unformatted text preview: Module 6 1 Module 6 Module 6 2 Abstract Response to the first question defines Corporation as a separate and legal entity. The major characteristics of a publicly traded firm include raising capital from diversified investors and issuing stocks to public. Response to the second question lists three key objectives of corporate governance such as the motivation of value-maximizing decisions; the protection of assets from unauthorized acquisition, use or disposition, and the production of proper financial statements. Response to third question compares the outsourcing with vertical integration and lists the reasons because of which a corporation would choose outsourcing over vertical integration. . Module 6 3 Module 6 Deliverables Assignments: Questions Question: 1. What is a corporation? Describe the major characteristics of a large publicly traded corporation. Response : A corporation is a separate and distinct legal entity. A corporation can open a bank account, own property and do business, all under its own name. The primary advantage of a corporation is that its owners, known as stockholders or shareholders, are not personally liable for the debts and liabilities of the corporation. For example, if a corporation gets sued and is forced into bankruptcy, the owners will not be required to pay the debt with their own money. If the assets of the corporation are not enough to cover the debts, the creditors cannot go after the stockholders, directors or officers of the corporation to recover any shortfall. A corporation is managed by a board of directors, which is responsible for making major business decisions and overseeing the general affairs of the corporation. Directors are elected by the stockholders of the corporation. Officers, who run the day-to-day operations of the corporation, are appointed by the directors. A corporation is liable for the torts or wrongful acts committed by its agents or officers within the course and scope of their employment. A Module 6 4 corporation may also be held liable for the criminal acts of its agents and employees provided the punishment is a fine. Thus, Corporations have the legal standing of an individual (distinct from its shareholders) and can enter contracts and participate in lawsuits. Corporate directors and officers can be imprisoned for their criminal acts and can also be fined even for the actions of employees under their supervision. can also be fined even for the actions of employees under their supervision....
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This note was uploaded on 12/08/2011 for the course MBA 520,510,59 taught by Professor Kate during the Spring '11 term at Asian Institute of Management.

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AMaheshwari_BUS540-LH_Module06_05-06-2011 - Module 6 1...

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