FIN 3715 Study Guide - Quiz Guide: Double Taxation, Corporate Finance, Down Payment
Document Summary
Disadvantages: limited to life of the owner, equity capital limited to owners personal wealth, because of insufficient capital, it is hard to exploit new investment opportunities, unlimited liability, difficult to sell ownership interest, because you would have to transfer everything to one person. Advantages: limited liability, unlimited life, separation of ownership and management, the shareholders select the board of directors and then they select the managers, shareholders (cid:224) board of directors (cid:224) managers, they issue debts/equities, transfer of ownership is easy, easier to raise capital. The threat of takeover may result in better management: other stakeholders, governments, employees (interested in job securities, customers want to keep the product value high, creditors get paid the interest payments from the company, community aspects such as environmental protection are also a factor, trade union is also interested in the quality of the company.
