The Model of the American Corporation

The American corporation is a legal entity separate from its owners, called shareholders. It is formed under state law and can own property, enter contracts, and be sued. Shareholders invest money by purchasing stock, and their liability is limited to their investment. The corporation is managed by a board of directors elected by shareholders, who set broad policies, while executives handle daily operations. This structure encourages investment by reducing personal risk and allowing the company to raise capital efficiently. Profits can be distributed as dividends or reinvested. Overall, it balances investor interests, management control, and legal protections to operate effectively in the marketplace.