Agriculture Reference
In-Depth Information
How the corporation functions
The common stockholders in a corporation elect the
board of directors
, the number of
which may vary according to the bylaws of the organization. The responsibility of the board
of directors is to supervise the affairs of the corporation. In a large corporation, the thou-
sands of individual stockholders exercise very little actual control. Those they vote for to
serve as directors may be unknown to them and are often preselected by a small group of
majority stockholders who are allied with top management of the corporation. The board
represents the interests of the stockholders, and their major function is to elect offi cers, hire
top management, and evaluate the progress of the business. Also, the board usually has
a major role in shaping the vision and mission for the business. In a small corporation
there is usually a very close relationship between stockholders and the board of directors;
in fact, there could be only one stockholder who, in effect, is in complete control of the
corporation.
Advantages of corporations
The primary advantage of the corporate form of business organization is that the
stockholders
(owners) are not personally liable for the debts of the organization, and in most
Plate 4.2
Woman at computer
Stock prices for important markets such as the New York Stock Exchange are widely reported as
is other relevant information. Photo courtesy of USDA Natural Resources Conservation Service.
