The Corporation.

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Presentation transcript:

The Corporation

Of the 100 largest economies in the world…. The Corporation Of the 100 largest economies in the world….

About half of these would be that of corporations…… The Corporation

The Corporation

The Corporation

The Corporation

Due some key advantages, this business organization has catapulted into a dominant position in the United States.

One huge advantage-limited liability

Your personal assets are not at stake if a corporation defaults on its debts.

Capital & Money

Companies can attract capital quickly

But how do they do that?

Capital is raised by the sale of stocks & bonds…

Bonds are promises to repay a loan- usually at a set rate of interest.

Stocks are shares of ownership..

Known as “equity investments”

Sometimes these are referred to as Securities

Common and Preferred

Common- Owners share in success when company prospers

Owners at risk if company falters Very volatile- higher risk

Preferred

Dividend payments have a priority over common stock holder rights

Dividends will not significantly go up if the company prospers

“Blue Chip”

Which of these is considered a safer investment?

Why would the average person be interested in investing?

“Ease of Sale” is the important concept

Regular folks can own part of a business-

Hope to share in monetary rewards….

& not worry about actively managing the business!

If you no longer wish to speculate, you can sell your securities

Corporations can run into problems…

Principal-agent problem

Conflict of interest may arise

Principals-stockholders

Agents-managers

Profits & stock prices may not be maximized for owners.

Corporations have avoided personal responsibility for questionable business activities

Has this been a problem for business our our society?

IBM & Nazi Germany

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