Corporation
A corporation is an institution that is granted a charter recognizing it as a separate legal entity having its own privileges, and liabilities distinct from those of its members.[1] There are many different forms of corporations, most of which are used to conduct business.
History
Corporations exist as a product of corporate law, and their rules balance the interests of its stakeholders: the management who operate the corporation; creditors who loan it goods, services or money; shareholders who invest their capital; the employees who contribute their labor; and the clients they serve. In modern times, corporations have become an increasingly dominant part of economic life.
An important feature of corporation is limited liability. If a corporation fails, shareholders normally only stand to lose their investment, and employees will lose their jobs, but neither will be further liable for debts that remain owing to the corporation's creditors.
Despite not being natural persons, corporations are recognized by the law to have rights and responsibilities like actual people. Corporations can exercise human rights against real individuals and the state, and they may be responsible for human rights violations. Just as they are "born" into existence through its members obtaining a certificate of incorporation, they can "die" when they lose money into insolvency. Corporations can even be convicted of criminal offenses, such as fraud and manslaughter.
Although corporate law varies in different jurisdictions, there are five core characteristics of the business corporation:
- Legal personality
- Limited liability
- Transferable shares
- Centralized management under a board structure
- Shared ownership by contributors of capital.
A 2011 study found that US citizens across the political spectrum dramatically underestimate the current level of wealth inequality in the US, and would prefer a far more egalitarian distribution of wealth. A 2014 report states, 18 corporations hold one third of the nation's wealth:
- The majority of corporate cash is amassed in the coffers of 18 U.S. firms — they held 36 percent of all wealth last year, a jump from 27 percent in 2009 with the gap expected to widen further, according to a report from Standard & Poor’s, a New York-based credit rater. That means that out of a record $1.53 trillion in cash and short-term investments held by U.S. corporations the wealthiest 18 held about $535 billion. “In our view, current U.S. corporate tax policy and accommodating credit market conditions have been primarily responsible for this growing wealth gap,” the report said. Furthermore, the wealthiest top 20 percent held 89 percent of total cash, leaving only 11 percent for the bottom 80 percent of firms.[2]
From 1989 to 2019, wealth became increasingly concentrated in the top 1% and top 10% due in large part to corporate stock ownership concentration in those segments of the population; the bottom 50% own little if any corporate stock.
