Talk:Corporation

Criticisms

This section is badly written and doesn't make sense. E.g. " when ownership is separated from management (i.e. the actual production process required to obtain the capital), " the actual production process required to obtain the capital? What does this even mean? Capital is obtained externally by a corporation (usually from shareholders/owners) and is not an output of the production process unless you broaden the definition to include retained earnings, though I doubt that this is the intention of what was said. — Preceding unsigned comment added by 62.209.27.124 (talk) 11:01, 14 December 2011 (UTC)

"The US is a corporation"

Archives: /Archive1; /Archive2; /Archive3

I deleted this incorrect statement:

In the context of debt collection, the United States is itself legally defined as a "Federal corporation".

The link goes to a section of the US Code that uses the term "corporation" for shorthand for several entities. This is not a "legal definition" of the United States of America as a corporation. Comet Tuttle (talk) 22:38, 7 June 2010 (UTC) the u.s. is definitely not a corporation, its an empire 69.140.35.147 (talk) 09:42, 27 September 2010 (UTC)

Lock down

The Corporation article is on lock down since it's really good and doesn't need improvement. The article makes complete sense, esp. because it is really really good and has a lot of sites. Thank you for locking htis article, so Prof. Todd can't mess with it. He doesn't make any sense and wants only bad things. Thanks for the lock down and keep it up!!! —Preceding unsigned comment added by 98.207.96.124 (talk) 22:44, 8 June 2010 (UTC)

Corporate Law section

It's my understanding that the "directing mind and will", or identification, doctrine has been supplanted by the theory of rules of corporate attribution in the law of the United Kingdom (and NZ, I don't know about the US) - see Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 2 AC 500, per Lord Hoffman. Lord Hoffman explains that the primary rules of attribution are found in the company's constitution (articles of association, etc), or in company law - i.e. the rule that the informal unanimous assent of the shareholders binds the company. The general rules of attribution are the rules of agency, which are equally available to natural persons. He goes on to refer to the need to fashion special rules of attribution in order to apply statutory rules to companies when the rule is intended to so apply but specifies some action or state of mind be possessed by the person himself as opposed to by his servants or agents.

Should the quotation referring to the identification doctrine be replaced by one reflecting a modern understanding of corporate attribution? Landon3 (talk) 10:05, 19 June 2010 (UTC)

Regarding shareholders as "capital providers" or "investors"

There seems to be a question of whether shareholders are actually the "contributors of capital." Adolf Berle of the Roosevelt Braintrust who wrote THE text on the modern corporation with Dr. Means provides the view that "By folklore habit we say the buyer of stock of AT&T or General Motors has "invested in" these companies; but this is pure fiction." This quote comes from Modern Functions of the Corporate System by Adolf A. BerleSource: Columbia Law Review, Vol. 62, No. 3 (Mar., 1962), pp. 433-449. Here is the context.

"When I buy AT&T or General Motors, I do not remotely "invest in" either concern. I have bought from Nym, who bought from Bardolph, who bought from Pistol, who bought through ten thousand predecessors in title from Falstaff, who got the stock when originally issued. Let us assume Falstaff was a genuine investor-that he bought the stock directly from the corpora-tion, or as promoter, or in some other fashion contributed to the enterprise. This contribution, the only real "investment" in the chain, was probably an infinitesmal fraction of the price I paid to Nym. Now what Nym does with the price he receives from me nobody knows; the one certainty is that he does not contribute any of it to AT&T or General Motors."

In one set of circumstances, we do know approximately what happens. This is in the case of "institutional" buying and selling. It accounts for about twenty per cent of all stock exchange transactions. When the X mutual fund sells AT&T it commonly uses the proceeds to buy General Motors or some other stock. But, again, it is certainly buying stock from Nym, not putting money into General Motors. By folklore habit we say the buyer of stock of AT&T or General Motors has "invested in" these companies; but this is pure fiction."Buddylovely (talk) 13:44, 11 July 2010 (UTC)

Continuing the quote:" Now if General Motors were regularly raising capital by selling stock in the market, my purchase of General Motors stock from Nym would have an effect on the price of its shares. This in turn would have an effect on the price at which General Motors could float a new stock issue. In the utilities industry, where new stock issues are standard practice, there is a traceable effect on the price the utilities pay for new capital. But the great industrial companies do not (or only at very rare intervals) seek capital by floating common or any other kind of stock. Many companies, and these the largest, either have never done so or have done it so rarely that the rise and fall of the price of their shares has no traceable effect on the price they have paid or will later pay for capital; for the most part they generate their capital internally. So far as they are concerned, the market price for their stock has only a psychological effect. In fact, if the stock market shut down com-pletely (as it did in 1914), or if all of their stock were miraculously wiped out, it would not have a great effect on their operations, though it might have tangible effect on the number of buyers ready, willing, and able to buy their cars or washing machines. It is theoretically possible, of course, that the money invested by people buying in the stock market somewhere, somehow, contributes to investment capital. It would have to be demonstrated that a margin of the sellers of stock eventually "invest" some of their proceeds in new enterprises or new security issues. Buddylovely (talk) 13:47, 11 July 2010 (UTC)

I don't see the problem, because this article doesn't directly address the fact that secondary shareholders are not owners. Where does the question come up? --Jonovision (talk) 06:17, 12 July 2010 (UTC)

Dear Sir, The cited material is in regards to the debate about whether shareholders are or in fact are not generally,"contributors of capital." I don't believe the cited material mentions ownership at all. However, Adolf Berle wrote a book about the subject if you are interested. —Preceding unsigned comment added by Buddylovely (talk • contribs) 07:05, 15 July 2010 (UTC)

That's fine, but nobody is actually debating whether secondary shareholders are contributors of capital. The article doesn't even address that subject. --Jonovision (talk) 04:53, 16 July 2010 (UTC)

I have found 3 quotes, which are listed below, in the introduction that state that shareholders are the "contributors of capital" and "investors". I do not believe that a reader can infer from the introduction that the shareholders referred to are in fact the original investors who received the original share for their investment. Rather, the implication is clearly that ALL shareholders are investors of capital. 1st paragraph: "...shareholders who invest capital" 2nd paragraph: "shareholders normally only stand to lose their investment..." Last paragraph: "Shared ownership by contributors of capital."Buddylovely (talk) 12:04, 16 July 2010 (UTC)

Although those quotes were all written by different editors, I don't think any of them were intended to convey the idea that all shareholders are owners. I didn't get that impression from reading it. I agree that it is a common misconception, but I don't think our article introduction is worded in a way that makes it worse. --Jonovision (talk) 22:02, 17 July 2010 (UTC)

Dear Sir, I am not sure what to make of your first sentence, "...I don't think any of them [the authors] intended to convey the idea that all shareholders were owners." But the issue is that in the article shareholders are called "investors" or "contributors of capital", not owners. In fact, I don't see where shareholders are referred to as owners. I assume that you've made a typo and meant to write "investors" not "owners". Let me try to understand your logic: although we both agree that there is a mistake in the article that could easily be corrected, you don't think it's necessary because (1) the mistake wasn't intended and (2) because perpetuating the mistake doesn't make the misconception in society worse. Does this fairly represent your view?Buddylovely (talk) 10:57, 18 July 2010 (UTC)

Okay, I must be misunderstanding you. I don't think there is a mistake in the article. Can you tell us again what you think the problem is? You don't need to bring up quotes or references to justify what you're saying, but just tell us in a sentence or two "I think the article is wrong, because..." --Jonovision (talk) 21:37, 18 July 2010 (UTC)

Sure. The main problem is that, contrary to what's written in the article, shareholders are NOT investors or contributors of capital. As Berle mentions, most of a corporation's capital is generated internally, not supplied by shareholders. By calling shareholders something that they are not, truth remains hidden and the collective consciousness suffers. In The Speculation Economy 2009, Mitchell explains that at the turn of the 19th century shareholders changed from investors to speculators. The same goes for Marjorie Kelly in The Divine Right of Capital. The fact that shareholders are clearly NOT investors or contributors of capital, but still called this is because the terms are remnants of 19th century classical economics, which is still taught in universities. This is exactly what Berle discusses in his paper The Impact of the Corporation on Classical Economic Theory (The Quarterly Journal of Economics, Vol. 79, No. 1 (Feb., 1965), pp. 25-40.) The bottom line is: why not be accurate if it's easy to do so? Thank you for your time.Buddylovely (talk) 14:39, 19 July 2010 (UTC)

My understanding is that the term "shareholder" can be used either way: it could refer to a single or a few owners of a company, or it could refer to secondary shareholders who bought their shares on a stock market. The term "investor" is equally broad, and could include speculators. The article, as it is written now, is careful to avoid using those terms in an inappropriate way. For example, it says that a corporation can have "shared ownership by contributors of capital" -- the term "shareholders" doesn't appear in that sentence at all. --Jonovision (talk) 20:25, 19 July 2010 (UTC)

To determine how broadly a term can be used, I would suggest consultation with an outside source, such as a dictionary. Of course, definitions vary, but Princeton says: an investor is "someone who commits capital in order to gain financial returns" and defines a speculator as "someone who risks losses for the possibility of considerable gains". A shareholder commits no capital to a corporation except in the rare case of an IPO; therefore, shareholders are generally not investors. Rather, most shareholders, while not investors, do risk their own wealth for a possible gain, like the speculator.

Some people unintentionally call shareholders "investors" because they have been taught in 19th century classical economics. But they use the term incorrectly. Adolf Berle discusses why shareholders are NOT investors and why they shouldn't be called investors. The point is that if shareholders are not investors, why not avoid the controversy by simply referring to shareholders simply as shareholders?

Regarding the quote, "shared ownership by contributors of capital", I realize that it is not stated, but this is a clear reference to shareholders. I don't mind discussing it, but I think it's self-evident that the passage refers to shareholders. We might discuss it in a different section. Thanks.Buddylovely (talk) 12:01, 20 July 2010 (UTC)

But shareholders are investors. In the broadest sense of the term, an investor is anyone who commits wealth (capital) in hopes of gaining a return. In this sense, the term "investor" includes both owners and secondary shareholders.

The same goes for the second quote ("shareholders normally only stand to lose their investment..."). This is true of both owners and secondary shareholders.

The third quote, on the other hand ("shared ownership by contributors of capital"), quite clearly avoids the term "shareholder". I really don't see how you think it's self-evident that he really means shareholder. --Jonovision (talk) 07:45, 21 July 2010 (UTC)

Dear Sir, The distinction that must be made is between capital used in production and the personal wealth of the shareholder. "Investment" in business is the capital used in production. Money paid for stock in the secondary market is not capital used in production. However, the shareholder does commit his wealth seeking a return, much like a gambler at a poker table. The quote "shareholders tend to lose only their investment..." like a gambler loses his "investment" on the poker table. But this would be in accurate because gamblers don't "invest" in the game, no one uses his money as capital to make things. A better phrase for the article would be "shareholders tend to lose only what they paid..." An easy change that avoids the controversy. Regarding the quote "shared ownership by contributors of capital," to whom do you think the quote refers.Buddylovely (talk) 10:19, 21 July 2010 (UTC)

I understand what you're saying, but I think you're nitpicking quite a bit. Even a dictionary doesn't provide more than a broad definition of the words "invest" or "capital". I don't think there's difference in saying "I bought shares of Enron, but I lost my investment" or "I put money into my own business, but lost my investment when it went bankrupt". Sure, those are very different situations, but a corporation's limited liability applies in both cases. The same goes for the word "capital". It's just being used in its broadest sense. --Jonovision (talk) 12:00, 21 July 2010 (UTC)

It is true that the difference between investing one's wealth in the productive capacity of a business (i.e. supplying capital) and investing one's wealth in a poker game is subtle--in fact, I used invest in both cases. But this subtlety is what Adolf Berle was referring to in the quote above as something of great importance. Why. Because we must distinguish between those who provide capital for productive capacity and those who do not. Thus, the money you "invest" in a poker game is not the same as the money you invest in productive capacity, which is capital for a business. Shareholders in the secondary market make side bets on the productive capacity of a business, but provide no capital. So the difference is that one person invests capital in the productive business and the other person makes a side-bet on the company's performance. A subtle but important difference.Buddylovely (talk) 14:53, 22 July 2010 (UTC)

This is probably a bit too much detail to go into in the article introduction. After all, we're covering both private and public corporations, and there's countless other details that have been left out. As long as the intro isn't wrong, I'm okay with it being a bit vague and general. Perhaps the Shareholder article would be a good place to start. We could add a new section discussing this whole issue. One thing that would be good to know is whether it's true of corporations globally. We know that it's true in the US at least, but what about other countries? --Jonovision (talk) 06:53, 23 July 2010 (UTC)

I agree that this is too much detail for the article, but the detail does not need to go into the article. It is easy to change the article so it doesn't call shareholders something we agree they are not: "suppliers of capital" or "investors" These adjustments can be made easily without detailed discussions. Without making these changes, there is no doubt, according to Adolf Berle et al., the introduction is wrong. It incorrectly calls shareholders investors when they contributed no capital to the corporation. The introduction makes very clear and incorrect implication that shareholders supply capital for production when they, in fact, do no such thing. Bottom line: the intro is incorrect on a very important issue and should be changed.Buddylovely (talk) 13:37, 23 July 2010 (UTC)

Well, there's no harm in removing the part that says "shareholders who invest their capital" and just making it say "shareholders". (I disagree with you that it's wrong, because I think someone is reading too much into it if they come to the conclusion that shareholders are owner). This version will be shorter, which is good for the article introduction. --Jonovision (talk) 03:21, 24 July 2010 (UTC)

Dear Sir, I agree with you that little harm is done by simply calling shareholder, "shareholders". Thank you. BTW, I think you made a typo with "owner" again, rather than "investor", but I get you, although I disagree. I realize it seems like a small difference, calling shareholders "investors", but this improper labeling of shareholders has been used as a reason to provide CEOs with stock options. These stock options resulted in the financial scandals of the late 1990s, which is well documented and admitted to by Micheael Jensen and Kevin Murphy. The point is that when people place shareholders on a pedestal on which they don't belong, bad things happen. Maybe I will give the shareholder section a shot, explain things there, then bring it back here as you suggested. Thanks again for you time and openmindedness.Buddylovely (talk) 12:38, 25 July 2010 (UTC)

I've done the edit and changed "creditors who provide loans, shareholders who invest capital" to just "creditors, shareholders", since the term "creditor" isn't limited to loan providers. --Jonovision (talk) 02:50, 26 July 2010 (UTC)

Excellent. But I have to ask, what do creditors provide except for loans?Buddylovely (talk) 11:45, 26 July 2010 (UTC)

Nonprofits

First, the word is spelt "nonprofit" without the hyphen. Like most prefixes (and suffixes) added to root words to create new combined words, there is no hyphen unless confusion would be caused or duplication of vowels would result. Think of the prefixes "un," "pro," "pre," "do," and so on. Common exceptions are prefixes which are words standing on their own, e.g., "cross," "elect," "odd," and combined words in which the root is a Capitalized proper noun, e.g., "antisocial," but "anti-American." However, correct grammar and spelling can be debated elsewhere.

Second, and more to the point, under the subhead United States the sentence "Tax-exempt non-profit corporations are often called “501(c)3 corporation”, after the section of the Internal Revenue Code that addresses their tax exemption." contains an error in fact.

Internal Revenue Code (IRC) Section 501(c)(3) refers to "religious, educational, charitable, scientific, literary. . . " organizations. There are 27 other subsections to 501(c) and eight other tax exempt types of organizations defined in the IRC. See IRS Publication 557 http://www.irs.gov/pub/irs-pdf/p557.pdf for a table describing them all. "Tax exempt" ≠ "charitable." "Nonprofit" ≠ "charitable" or "501(c)(3)."

Oh, and do notice that the IRC Section is properly referenced with both subsections in parentheses-- Section 501(c)(3), not 501(c)3.

Tloc (talk) 20:02, 14 July 2010 (UTC) —Preceding unsigned comment added by Jonovision (talk • contribs)

Edit request from Grumbely, 17 July 2010

{{editsemiprotected}}

Requesting for sv:Kooperation to be changed into sv:Korporation. The link is refering to a completely unrelated (but obviously similar-sounding enough word). "Korporation" is the proper translation.

It's even clearly stated in the Swedish article for Kooperation that the word is "not to be confused with korporation".

Kooperation means cooperation, and korporation means corporation.

Thanks in advance!

Grumbely (talk) 20:34, 17 July 2010 (UTC)

Done! Thanks. Kuru (talk) 20:50, 17 July 2010 (UTC)

Not all corporations throughout history or the world are formed by states

Not — Preceding unsigned comment added by Buddylovely (talk • contribs) 16:20, 22 April 2011 (UTC)

Not all corporations throughout history or the world are formed by states

I was trying to make this edit. Unfortunately, I didn't state this in the edit and BlueHaired Lady undid it. I redid it and I'm hoping it stays. — Preceding unsigned comment added by Buddylovely (talk • contribs) 16:22, 22 April 2011 (UTC)

Corporate Structure?

Excuse me if this is the wrong place to put this request. I'm new to Wikipedia and am really just guessing as to where to go to ask for more information.

I was looking for a flow chart that showed the organization of a typical corporation (board of directors on top, CEO, VPs, various departments underneath), so I looked under "Corporate Structure" and didn't find much except a link to this article on corporations generally. But this one didn't discuss corporate structure or governance, either. It appears to me that there's a hole waiting to be filled, but I myself am ill equipped to fill it, since I'm a user, not a provider.

Can anyone help?   RichardSRussell@tds.net — Preceding unsigned comment added by 184.60.36.89 (talk) 18:10, 25 October 2011 (UTC)

Corporations can exercise human rights?

The article claims "Corporations can exercise human rights", which sounds very strange and is not supported by the source cited (South African Constitution Art.8, especially Art.(4)). That constitution does not mention the word "corporation" and does not use a synonym or talk about anything similar when it mentions human rights. --Espoo (talk) 07:42, 2 June 2012 (UTC)

A "juristic person" is a synonym for corporation. — Blue-Haired Lawyer ^t 08:28, 2 June 2012 (UTC)

I agree that the text you cite makes little sense. You're left with the question: what human rights does the corporation have? Unless that is listed, I think the text cited should be deleted. 12:07, 20 July 2012 (UTC)12:07, 20 July 2012 (UTC)12:07, 20 July 2012 (UTC)12:07, 20 July 2012 (UTC)12:07, 20 July 2012 (UTC)12:07, 20 July 2012 (UTC)~ — Preceding unsigned comment added by Sigiheri (talk • contribs)

What law is referred to here..

"Despite not being natural persons, corporations are recognized by the law " - which law is this referring to? I think the article is trying to say that under various jurisdictions corporations can be treated as persons in some respects, however as written it seems to be referring to the law of a single country.