Chapter 5: Forms of Ownership
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
