FINA 363 Chapter 1: Tophat
Document Summary
How finance helped shape modern civilization: engine of economic growth and innovation by allocating society"s savings into productive use, democratization of entrepreneurship and investing, reduction of household economic risk (insurance, personal and retirement savings, etc. ) Joint-stock ownership: shareholders jointly own the company and buy and sell shares in the company without affecting its continued existence. Corporate personhood: corporations are considered legal persons with some of the same powers and protections granted to natural persons. Corporations are allowed to own property, enter into contracts, and sue and be sued. Because a corporation is a separate legal entity from its shareholders, its profits are subject to taxation at the corporate level before shareholders are also taxed on their individual income from the corporation (double taxation). Limited liability: the shareholders" financial liability is limited to the value of their investment in the corporation and they are not personally liable for the corporation"s obligations.
