Posts tagged distortion

L1026568 (via http://flic.kr/p/HZPKdA )

The shift to the distorporation comes at the expense of the “C” corporation, the formal name for the familiar limited-liability joint-stock structure that emerged a century ago (see chart 1). The newer structures still protect investors from liability. But the requirement for partnerships to pass through their money blocks the accumulation of earnings. In C corporations retained earnings can be used to fund investment and growth, assuring persistence. Without them, pass-through businesses have to be far more intertwined with investors. Staying alive means routinely inhaling capital, as well as exhaling.

http://www.economist.com/news/briefing/21588379-mutation-way-companies-are-financed-and-managed-will-change-distribution