Chapter 5: Forms of Ownership

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chief executive officer

CEO, the highest ranking officer of a corporation

Sole proprietorship

a business owned by a single person

private corporation

a corporation in which all the stock is owned by a few individuals or companies and is not made available for purchase by the public

public corporation

a corporation in which stock is sold to anyone who has the means to buy it

proxy

a document that authorizes another person to vote on behalf of a shareholder in a corporation

board of directors

a group of professionals elected by shareholders as their representatives, with responsibility for the overall direction of the company and the selection of top executives

limited liability

a legal condition in which the maximum amount each owner is liable for is equal to whatever amount each invested in the business

unlimited liability

a legal condition under which any damages or debts incurred by a business are the owner's personal responsibility

corporation

a legal entity, distinct from any individual persons, that has the power to own property and conduct business

strategic alliance

a long term partnership between companies to jointly develop, produce, or sell products

liquidity

a measure of how easily and quickly an asset such as corporate stock can be converted into cash by selling it

general partnership

a partnership in which all partners have joint authority to make decisions for the firm and joint liability for the firm's financial obligations

limited liability partnership

a partnership in which each partner has unlimited liability only for his or her own actions and at least some degree of limited liability for the partnership as a whole

limited partnership

a partnership in which one or more persons act a general partners who run the business and have the same unlimited liability as sole proprietors

master limited partnership

a partnership that is allowed to raise money by selling units of ownership to the general public

benefit corporation

a profit seeking corporation whose charter specifies a social or environmental goal that the company must pursue in addition to profit

joint venture

a separate legal entity established by two or more companies to pursue shared business objectives

limited liability corporation

a structure that combines limited liability with the pass-through taxation benefits of a partnership; the number of shareholders is not restricted, nor is members' participation in management

S corporation

a type of corporation that combines the capital raising options and limited liability of a corporation with the federal taxation advantages of a partnership

leveraged buyout

acquisition of a company's publicly traded stock, using funds that are primarily borrowed, usually with the intent of using some of the acquired assets to pay back the loans used to acquire the company

hostile takeover

acquisition of another company against the wishes of management

shareholder activism

activities taken by shareholders to influence executive decision making in areas ranging from strategic planning to social responsibility

acquisition

an action taken by one company to buy a controlling interest in the voting stock of another company

merger

an action taken by two companies to combine as a single entity

partnership

an unincorporated company owned by two or more people

corporate governance

in a broad sense, describes all the policies, procedures, relationships, and systems in place to oversee the successful and legal operation of the enterprise; in a narrow sense, refers to the responsibilities and performance of the board of directors specifically

shareholders

investors who purchase shares of stock in a corporation

corporate officers

the top executives who run a corporation


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