Question

Today most publicly listed firms (i.e. firms listed and traded on the NYSE or Nasdaq, such as Facebook, Apple) adopt the corporate form of business organization, not partnership. (1) Name at least two advantages of the corporate form that works better for publicly listed firms relative to partnership; (2) Name at least one disadvantage of the corporate form of business organization compared to partnership.

Answer 1

Advantages of corporate form of business organisation over partnership are as follows :

i) Indefinite Period of time .- the life of a company continues for an unlimited time period irrespective of the change in ownership  , It has an identity of its own ..whereas the life of the partnership is affected as soon the ownership structure changes .

ii) Ease of Raising Capital - A company can easily raise additional capital by offering shares or stock

ii) Individual owners' liablity is limited to the value of the shares held by them , whereas the partner are jointly responsible for all the obligations of the Business .

Disadvantages of Corporate Form of business organization over partnership

i) Corporate Forms are subject to strict Government , Federal , State and local Rules and regulations . Complying with this norms can be too costly and time taking as well whereas Partnerships are subject to fewer regulations than corpoartions .