Managerial Finance Essay
Proprietorship - it is difficult for a proprietorship to obtain large sums of capital, the proprietor has unlimited personal liability for the business’s debts, and the life of a business organized as a proprietorship is limited to the life of the individual who created it.
Partnership - unlimited liability, limited life of the organization, difficulty of transferring ownership, and difficulty of raising large amounts of capital. Corporation: corporate earnings may be subject to double taxation and setting up a corporation and filing the many required state and federal reports is more time-consuming than for a proprietorship or a partnership. Also, corporations do not relieve the owners of professional liability. Limited Partnership – the limited partner typically have no control. c. How do corporations go public and continue to grow? What are agency problems? What is corporate governance?
A company goes public when it sells stock to the public. As the firm grows, it might issue additional stock or debt. An agency problem occurs when the managers of the firm act in their own self- interests and not in the interests of the shareholders. d. What should be the primary objective of managers? The corporation’s primary goal is stockholder wealth maximization. * Do