Question

As you have read in the text concerning the legal forms of business ownership, the corporation avoids the concept of unlimited liability. This means the owners (stockholders) are not liable for the entire debts that the corporation incurs. The only amount of money they can lose is the amount of their investment in the company.

The Board-of-Directors and the Chief Executive Officer (CEO) are the main group of people that are responsible for strategic decisions that a corporation makes. This group also owns quite a bit of the company's stock which makes them partial owners of the company. During the past few years, the federal government has had to come to the aid of many large corporations in order to bail them out of potential bankruptcy because of the high level of risk and unwise business decisions made by the CEO and Board of Directors. All of this basically means, is that the leaders and highest paid positions of major corporations have very little to lose by making questionable business decisions.

The question is:

1. Should the CEO and Board of Directors have more personal liability in the way they run a corporation?

2. Should their personal assets, houses, bank accounts, automobiles, etc. be used as payment when they knowingly make unsound, precarious business decisions?

****Limit 100 words long (not exceed 120 words) for each question.

Answer 1