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What is limited liability? Why does the government grant limited liability to the owners of corporations?
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Firms, the Stock Market,and Corporate Governance
Types of Firms
How Markets Work
The Real Economy in the Long Run
Short-Run Economic Fluctuations
Why is limited liability m…
All right. So why What a corporation want to do? A limited liability, sort of a situation. So limited liability means is that you're not allowed to lose more money than you put it. So, uh, if you invest $1000 of your corporation, you can only lose $1000. Your personal assets were not put at risk, so you can't lose more, then you put it. And so why would the government allow someone to have a limited liability corporation and jealousy? And the reason for that is simply because, uh of investors. Oh, once upon a time, if you want to invest in a firm, you had to become a partner, which means that if the firm failed, that meant you, uh you could lose your personal assets. And if that happened, you the corporation would go bankrupt and you were to go back with them. Dad was not favorable, because if you want not only on a small part of a corporation like buying stock in Twitter or Facebook or Apple or Google or whatever, you want to buy a corporation and you don't wanna lose all your money if the company goes under and So that's why limited liability is allowed. It means you can buy part of corporations without risking, uh, your personal assets, and that's why limited liability is a thing.
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