Business Ethics and Corporate Governance
<<Previous Chapter
Chapter 18 : Corporation - An overview
Definitions
Evolution of the corporate structure
Characteristics of Corporation
limited liability
transferability
legal personality
centralized management
Purpose of a corporation
Human satisfaction
Social structure
Efficiency and efficacy
Ubiquity and flexibility
Identity
Corporation as a ‘person'
Corporation as a ‘moral person'
Corporation expectations of society and market place.
Chapter Summary
|
In this chapter, we learned that corporations are legal
entities in the eyes of the law. They can borrow money, enter into contracts,
own property, and sue and be sued like individuals. The operations of
corporations are carried out independent of any individual member.
Stockholder ownership of corporation has become prevalent since owners have
limited liability as compared to sole proprietorship and partnership firms.
The death or retirement of a director or directors does not affect the existence
of a corporation. In spite of the above-discussed advantages, corporations
involve higher start-up costs and their activities are more regulated. Gradual
improvements in corporate structure enabled corporations to meet specific needs
of business that were not met earlier. Changes that occurred at every stage
helped corporations to establish their own perpetuity and growth. As
corporations started growing, they acquired certain characteristic features that
distinguished them from other business organizations. |
|
The four important features of a corporation are, limited liability for
investors, free transferability of investor interests, legal status as
“person” and centralized management. A corporation is considered to be
one of the most pervasive elements in society that influences everyday
life. It determines the quality of life by serving different purposes,
i.e. it strives for human satisfaction by building long lasting social
structure. The corporate structure is utilized towards achieving
efficiency and efficacy while serving society. By being ubiquitous and
flexible, corporations aim at giving individuals a long-lasting result.
Moreover, a corporation maintains identity as an individual and thus
seeks protection from law. Corporation as ‘persons'and ‘moral person'play a significant role in achieving business objectives, morally. A
corporation also works for the welfare of a society by providing
employment opportunities, meeting the interests of various groups such
as employees, shareholders, customers, suppliers, creditors, etc. To the
end the chapter discusses the expectations of the society and the market
from a corporation.
Next Chapter>>
|
|
Short Case Studies / Caselets