1、R. GLENNHUBBARDANTHONY PATRICKOBRIENFIFTH EDITION 2015 Pearson Education, Inc.2 2015 Pearson Education, Inc.Chapter Outline andLearning Objectives6.1 Types of Firms6.2 The Structure of Corporations and the Principal-Agent Problem6.3 How Firms Raise Funds6.4 Using Financial Statements to Analyze a Co
2、rporation6.5 Corporate Governance Policy and the Financial Crisis of 2007-2009Appendix: Tools to Analyze Firms Financial InformationCHAPTER6 Firms, the Stock Market,and Corporate Governance3 2015 Pearson Education, Inc.Why Firm Structure, Finance, and Governance?In this chapter we will examine how f
3、irms are run: How they are organized, How they obtain financing, How they convey information to the public, and Whether they act in the best interest of their owners.Each of these items affect how firms behave, and what their overall impact on the economy will be.LEARNING OBJECTIVE4 2015 Pearson Edu
4、cation, Inc.Types of Firms6.1Categorize the major types of firms in the United States.5 2015 Pearson Education, Inc.The Types of FirmsFirms are legally categorized in the U.S. as one of the following:Sole proprietorship:A firm owned by a single individual and not organized as a corporation.Partnersh
5、ip: A firm owned jointly by two or more persons and not organized as a corporation.Corporation:A legal form of business that provides owners with protection from losing more than their investment should the business fail.6 2015 Pearson Education, Inc.Who Is Liable? Limited and Unlimited LiabilityIn
6、sole proprietorships and partnerships, no legal distinction is made between the assets of the firm and the assets of its owner(s).Asset: Anything of value owned by a person or a firm.This is not the case for corporations. The owners of corporations have limited liability, a legal provision shielding
7、 owners of the corporation from losing more than they have invested in the firm.Limited liability makes raising funds easier for a firm; it also makes investing in firms easier for individuals.7 2015 Pearson Education, Inc.Differences among Business OrganizationsThere is not a unique best business s
8、tructure.Corporations benefit from limited liability but are expensive to organize.Also, their profits may be taxed twice: once as corporate profits and again when the profits are disbursed to investors.Differences among business organizationsTable 6.1Sole Proprietorship Partnership CorporationAdvan
9、tages Control by owner No layers ofmanagement Ability to share work Ability to share risks Limited personalliability Greater ability toraise fundsDisadvantages Unlimited personalliability Unlimited personal liability Costly to organize Limited ability to raise funds Limited ability to raise funds Po
10、ssible double taxation of income8 2015 Pearson Education, Inc.Proportions of Business OrganizationsNearly of firms are sole proprietorships, and just one in six is a corporation.But since larger firms tend to be corporations, most economic activity takes place through them.Business organizations: so
11、le proprietorships, partnerships, and corporationsFigure 6.1(a) Number of firms (b) Revenue (c) Profits9 2015 Pearson Education, Inc.MakingtheConnection The Importance of Small BusinessMost economists argue that small firms are vitalto the healthof the economy. In a typical year, new small firms cre
12、ate 3.3 million jobs40% of all new jobs created.Similarly, while large firms may be good at improving existing products, small firms are often better at creating new and innovative products and services.Also, small firms are less likely to lay off workers during a recession (red bars on the graph).LEARNING OBJECTIVE10 2015 Pearson Education, Inc.The Structure of Corporations and the PrincipalAgent Problem6.2Describe the typical management structure of corporations and understand the concepts of separation of ownership from control and the principalagent problem.
