Explain why large and growing firms tend to choose the corporate form.

Explain why large and growing firms tend to choose the corporate form.

What will be an ideal response?

ANSWER

The advantages of the corporation begin to dominate as the firm grows and needs access to the capital markets to raise
funds. Because of the limited liability, the ease of transferring ownership through the sale of common shares, and the
flexibility in dividing the shares, the corporation is the ideal business entity in terms of attracting new capital.