Question

1. Why did the introduction of the ‘Corporate Shield’ lead to a significant increase in business...

1. Why did the introduction of the ‘Corporate Shield’ lead to a significant increase in business activity and funding?

2. For one point list six of the categories we covered in class that might lead to the piercing of the ‘Corporate Shield’.

3. What are the two main accounting standards used for corporate accounting?

Homework Answers

Answer #1

Corporate Shield or Corporate Veil is a legal concept that the shareholders of a corporation will not be held personally liable for the actions of the corporation. It separates their actions and the actions of the corporation. Through this, the shareholders won't be liable for the corporation's actions. This has encouraged the shareholders to take bigger risks and to invest more into their corporations as even if the corporation becomes bankrupt, they won't be personally liable for it. Due to this shield, the shareholders are protected and due to the safely of this protection, they are willing to put in more without the fear of liabilities.

This has lead to a significant increase in business activity and funding.

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