Open AccessThe Nature of the Business Corporation: Its Legal Structure and Economic Functions
Author(s) -
Iwai Katsuhito
Publication year - 2002
Publication title -
the japanese economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.205
H-Index - 28
eISSN - 1468-5876
pISSN - 1352-4739
DOI - 10.1111/1468-5876.00227
Subject(s) - corporation , shareholder , corporate governance , relation (database) , business , corporate law , dual (grammatical number) , corporate structure , economics , accounting , law and economics , finance , art , literature , database , computer science
Between a classical firm and a business corporation lies a fundamental difference in legal structure. While the first consists of a single ownership relation between owners and assets, the second consists of two overlapping ownership relations—between shareholders and the corporation, and between the corporation and corporate assets. The latter legal relation is indirect and exists only through the intermediary of the corporation that performs the dual role of a thing and a person. This paper shows how such two–tier ownership structure of the business corporation fundamentally affects the form of its organization, the ways and means of its governance and the efficiency of its performances. JEL Classification Numbers: D23, G30, K00, K22, L20.
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