MGMT 1B Lecture Notes - Lecture 4: Initial Public Offering, Preferred Stock, Treasury Stock
Document Summary
Week 2: chapter 11: characteristics of a corporation, separate legal existence: a corporation is a distinct legal entity. It can be sued and it can also enter into contracts: transferability of ownership: the share of stock is the symbol of ownership. Many shares may change hands (be bought and sold) without interrupting operations: perpetual existence: shares of stock are bought and sold every day. A corporation continually exists despite changes in ownership: limited liability: with one exception, the most an investor can lose is their investment. Stockholders are also taxed on dividends they receive. Thus, the same earnings are taxed twice: heavy regulation: the sec (securities and exchange commission) is the regulatory agency for public securities transactions. The sec does not protect the investor from losing their investment, but they do their best to protect them from getting incorrect information. They are expensed immediately: sarbanes oxley: created pcaob, pcaob public company accountant oversight board.
