ABSTRACT
Finance is a subsidiary category of economics and macroeconomic performance is contingent on the performance of financial markets and businesses inter alia. Finance, including the intertemporal financial decisions that are made by individuals, households, and governments, has everything to do with the acquisition, management, and use of (relatively scarce) financial assets (resources). An international genre of finance (open macroeconomics) incorporates trade, balance of payments accounting, transactions in international financial markets, and macroeconomic stabilization policies (fiscal and monetary) that impinge on government revenue, unemployment, money supply, interest rates, and exchange rates. Invariably, transactions in international financial markets are also accounted for in the balance of payments positions of nations (recall the relevant discussions of inventory accumulation, the business cycle, and unemployment in Chapter 2). Some significant international exposures will be discussed in Chapter 8.
There are various forms of business organizations, such as sole proprietor, partnerships, limited liability companies (LLCs), and corporations. However, corporations may be closed or open (public). Closed corporations do not have the same transparent obligations as public corporations, especially because they do not raise capital from the public. As such, public corporations have peremptory obligations to be transparent and straightforward in their financial dealings (transactions) with the public; meaning that their business transactions and financial statements must conform to lawful standards that also exemplify good (ethical) intentions. This chapter addresses some of the pressing economic and legal obligations of corporations, including their impact on a national economy, transparency requirements, reporting obligations, dividend payments and the economic and legal consequences of financial irregularities (shenanigans). The overarching objective is to present the interdependence of the financial and real sectors and investment law in relation to purchase and sale of securities.
