Corporations
A corporation is a firm owned by one or more individuals who own shares of stock that define ownership and rights to profits. Liability is limited to the value of corporation assets. Although corporations constitute the smallest category of business organization in the United States, they conduct most of the business. In 1998. corporations accounted for just 19 percent of the total number of firms in the economy but 90 percent of total business revenuers. From these numbers we can infer that many large firms are corporations and that this form of business organization possesses certain advantages over the proprietorship and the partnership in conducting large-scale production and marketing.
In a corporation, ownership is divided into equal parts called shares of stock. Shares are the equal portions into which ownership of a corporation is divided. If any stockholder dies or sells out to a new owner, the existence of the business organization is not terminated or enered as it is in a proprietorship or partnership. For this reason the corporation is said to possess the feature of continuity(连续性).
Another feature that makes the corporation radically different from other forms of business organization is share transferability—the right of owners to transfer their shares by sale or gift without having to obtain the permission of other shareholders(股东). For many large organizations, shares of stock are traded on a stock market such as the New York Stock Exchange. Other corporations, however, are smaller, and their shares are traded so seldom that they are not even listed on formal stock exchanges. The shares of these firms are traded by in- dependent stockbrokers(股票经纪人) on the over-the-counter market.
Share transferability is the most economically important feature of the corporation; in fact, share transferability is one reason for the origin of the corporation. It allows owners and managers to specialize, increasing efficiency and profitability in the firm. Owners of stock in a corporation do not need to be concerned with the day-to-day operations of the firm. All that owners need to do is observe the changing price of the firm’s shares on the stock market to decide whether the company is being competently managed if they are dissatisfied with the performance of the company, they can sell their stock. Managers, on the other hand, specialize in reviewing the day-to-day operations of the corporation.
Still another feature of the corporation is limited liability. Corporate shareholders are responsible for the debts or liabilities of the corporation only to the extent that they have invested in it. Many investors preferinvestments in which their risk of personal loss is strictly limited; the amount of direct investment in corporations is therefore increased as a result of the limited liability involved.
CorporationsIn the case of a corporation, the right to transfer shares is ______.