Rise Ethical Corporation by Reconstruct Ownership Relationship

We examine the issues relating to the most proper form of trade company ownership structurethat will maximize the trade company’s value to society. The nature of the trade company can be generally defined as an open corporation with separate residual risk-bearing (ownership) and decision-making (control) functions. In contrast, a closed form of corporation can be defined hashaving common ownership and control functions. Our findings suggest that the maximization oftrade company value to society is more readily achieved through a closed corporation typeformation, such as employee owned corporation or partnership, that fairly distributes all claimsincluding residual and ‘moral debt’ claims rather than an open corporation with large conflicts ofinterest and agency costs

Keywords:

open and close corporations , employee ownership , residual risk-bearing(ownership) and decision-making (control) , residual and ‘moral debt’ claims