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fair enough q but the legal structure of organizing people is a reactionary force and well behind the changes taking place in society (for instance web business
by fredBuddemeyer 17y ago
fair enough q but the legal structure of organizing people is a reactionary force and well behind the changes taking place in society (for instance web businesses with distributed operations still need a shopkeepers style business permit in some jurisdictions - "the business has to be somewhere where do they get their mail?").
in the case of corporations and their modern alternatives tax-engineering is the driver more than the things we are talking about.
w/r/t liability the corporation is an extremely inefficient mechanism for the elimination (or lately society's assumption) of the liability. the underlying risk of the entity has no bearing on the price of this risk (a break even bomb factory pays less than a profitable pillow store). the increasing importance of director's insurance shows the market has a way of addressing this and may provide the harbinger (if not the "write-up") you seek.
- grellas 17y agoI am referring to the risk that investors face of losing all their assets (beyond what they invested in a company) in case the company fails. I don't understand why people would put up money for investments in such cases. Are you saying that insurance would cover them? Not to belabor this but the idea of investors being shielded from losses beyond their risk capital was what gave the corporation its huge expansion over the years. That is how public companies came to be formed, for example. Still not understanding how investors would be motivated to invest in most companies without such protection.
- fredBuddemeyer 17y agoits pretty simple, corporate ownership/government fiat isn't the only way to protect investors that aren't willing to assume risk. you've done a good job of deconstructing most of this now just look at the pieces and see they are separate.