MGMT 1040 Study Guide - Invisible Hand, Profit Motive, Systems Theory
Document Summary
Limited liability: members of the corporation are financially liable for corporate debts only up to the extent of their investments. They differ from other forms of business" in two ways: 1) it becomes incorporated by having their existence fully recognized by the law instead of being formed by an agreement between members. 2) the shareholder in a corporation is entitled to a dividend from the company"s profits only when it has been declared . Dividends are declared by directors of a corporation. Privately held corporation - only a small group of investors own all of its outstanding shares. Publically held -stocks are listed on stock exchanges and can be trades amongst the general public. The corporate formed itself during the middle ages. The first corporations were towns, universities, and ecclesiastical (church) orders. By the 15th century the principle of limited liability came into play. Until the mid 1800s, prospective corporations had to apply for charters.
