business ownership Flashcards
advantage of public coporation
promote public welfare–cater ppl need
easier to get fund – support by government
lower price – government may subsidize
advantage of issuing shares
no interest burden
no redemption obligation
advantage of issuing bonds
bondholders do not have tight to vote in AGM so the current owner’s control over the firm is not diluted
lower risk of being taken over
what is the disadvantages of being a private limited company instead of a listed company
cannot issue shares to general public to raise capital
difficult to transfer its ownership
advantage of providing the service by a public corporation instead of a private enterprise
easier to get information about the general public from the government for decision making
can provide stable service with a lower price
easier to get loan with the backup of the government
example of public corporation
Airport Authority Hong Kong
Hong Kong Export Credit Insurance Corporation
example of government department
Census and Statistics department
Inland revenue department
example of government department financed by trading funds
Hong Kong Post
Companies Registry
do partnership needs to have consent of other owners when transferring ownership?
yes
both partnership and private limited company need consent
why people switch from sole proprietorship to partnership
To invite more investors to get new funds for expansion of his business
To make use of different expertise from partners
pros and cons when gov buy back share in MTR
pro
Government will have a better control of the train fare and it can freely reduce the fare to relieve the burden of the passengers
If MTR is fully owned and supported by government that would make it easier for MTR to get loans to fund its operation and investment.
Cons
It may lower the efficiency of MTR management and reduce its sensitivity to market price signals
The money involved in the purchase of MTR is substantial that the government may have better alternatives uses of the money such as education and medical services.
advantages of public corporation over a government department
aims at profit maximization and is more efficient
less bureautic inefficiency which leads to a more flexible operation
higher incentive to use resources more efficiently and lower the production cost
more responsive to consumers demand
advantages of partnership over sole proprietorship
wider source of capital
better division of labour among owners
risk and cost can be shared among owners
advantages of partnership over private limited company
lower tax rate
simple legal setup procedure (save cost)
advantages of private limited company over partnership
limited liability
wider source of capital
lasting continuity
advantages of public limited company over private limited company
wider source of capital
shares are freely transferable
what is a limited liability
the liability of an owner of a firm is confined to the amount of his investment in the firm
what is collective responsibility
all partners are bound by other partners’ business decision
who has the first priority to claim back
employees or bondholders?
次序
- 清盤官
- 政府，雇員
- bondholders
- preference shareholder
- ordinary shareholder
two difference in market economy and planned economy
ownership of most resources
state-owned vs privately-owned
decision of resource allocation
government control vs price mechanism
what is legal entity
the firm can acts as a legal person to make contracts, to own properties and be sued
what is lasting continuity
the firm existence not affected by any investor’s death or withdrawal
what are shares
shares are certificates of ownership which represents the ownership of shareholders in a limited company
what are bonds
bonds are certificates of debts issued by a limited company to raise capital
advantage of buying bonds rather than shares
can get interest return even if the company doesn’t make any profit that year
higher priority of getting paid than shareholders if the company is liquidated
advantage of issuing shares over obtaining loans
no interest burden
no repayment obliagtion
no redemption obligation XXXXXXX
u cant redeem a loan
but can only redeem a bond
advantage of providing services by a private firm instead of the government
more efficient management
easier to recruit expert
disadvantage of providing services by a private firm instead of the government
higher price as private firm aims at profit maximization
less information for future planning
