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You're missing the point. If I could suffer unlimited liability beyond my initial investment for things Exxon does, why would I invest? What would happen to E

You're missing the point. If I could suffer unlimited liability beyond my initial investment for things Exxon does, why would I invest? What would happen to Exxon if everyone thought that way?

dahfizz 7y ago
People would stop being able to retire because any and all investment has become infinitly risky. That's what would happen.
voxic11 7y ago
I need to invest my money in something[0]. If Exxon has a good track record of only incurring liabilities which they can cover using revenue (which they do) then I would invest with them over some other company without such a record. [0] https://meltingasphalt.com/wealth-the-toxic-byproduct/ https://meltingasphalt.com/wealth-the-toxic-byproduct/
pjc50 7y ago
If I could suffer unlimited liability for opening a restaurant, or even investing in my brother's restaurant, would I? If a staff member fails to wash their hands and kills a few people with a particularly disastrous food poisoning outbreak, who should lose their house, me (passive investor), or them (worker)? (Getting rid of limited liability also means the company is no longer necessarily a liability shield for its staff! People would likely fallback on not being a company, so either partnership arrangements or just a cloud of independent contractors)
- pmiller2 7y ago
  If your argument were correct, sole proprietorships and non-LLP partnerships would not exist.
  - bpt3 7y ago
    Neither take on external investors, partnerships are rare and generally carry insurance as protection against their liability, and sole proprietorships only exist due to ignorance or laziness on the part of the business owner (in the US at least), so I'm not sure what your point is here.
AnthonyMouse 7y ago
> If I could suffer unlimited liability beyond my initial investment for things Exxon does, why would I invest? Because you expect to make more money than you expect to lose. The liability risk (or the cost of insuring against it) would just get priced into the stock price. > What would happen to Exxon if everyone thought that way? They would presumably consolidate even more than they already have, so that the total amount of corporate assets is greater, which reduces the probability that a liability could exceed them and cause the shareholders to lose more than they put in. Limited liability benefits small corporations far more than larger ones, because the risk of incurring a liability that exceeds the total value of the corporation is higher when the total value of the corporation is smaller.

You're missing the point. If I could suffer unlimited liability beyond my initial investment for things Exxon does, why would I invest? What would happen to Exxon if everyone thought that way?

dahfizz 7y ago

People would stop being able to retire because any and all investment has become infinitly risky. That's what would happen.

voxic11 7y ago

I need to invest my money in something[0]. If Exxon has a good track record of only incurring liabilities which they can cover using revenue (which they do) then I would invest with them over some other company without such a record. [0] https://meltingasphalt.com/wealth-the-toxic-byproduct/ https://meltingasphalt.com/wealth-the-toxic-byproduct/

pjc50 7y ago

If I could suffer unlimited liability for opening a restaurant, or even investing in my brother's restaurant, would I? If a staff member fails to wash their hands and kills a few people with a particularly disastrous food poisoning outbreak, who should lose their house, me (passive investor), or them (worker)? (Getting rid of limited liability also means the company is no longer necessarily a liability shield for its staff! People would likely fallback on not being a company, so either partnership arrangements or just a cloud of independent contractors)

pmiller2 7y ago
If your argument were correct, sole proprietorships and non-LLP partnerships would not exist.
- bpt3 7y ago
  Neither take on external investors, partnerships are rare and generally carry insurance as protection against their liability, and sole proprietorships only exist due to ignorance or laziness on the part of the business owner (in the US at least), so I'm not sure what your point is here.

AnthonyMouse 7y ago

> If I could suffer unlimited liability beyond my initial investment for things Exxon does, why would I invest? Because you expect to make more money than you expect to lose. The liability risk (or the cost of insuring against it) would just get priced into the stock price. > What would happen to Exxon if everyone thought that way? They would presumably consolidate even more than they already have, so that the total amount of corporate assets is greater, which reduces the probability that a liability could exceed them and cause the shareholders to lose more than they put in. Limited liability benefits small corporations far more than larger ones, because the risk of incurring a liability that exceeds the total value of the corporation is higher when the total value of the corporation is smaller.