Final answer:
Incorporation grants a company increased borrowing powers by allowing the sale of stocks and bonds and providing a more stable structure for attracting investment and securing loans with limited shareholder liability.
Step-by-step explanation:
When a company becomes incorporated, it gains increased borrowing powers, which significantly affects its capacity to raise capital for expansion or other business purposes. this is because incorporation allows for the sale of stock—certificates granting partial ownership of the company—and bonds, which are promises to repay loans with interest. These financial tools are vital for attracting investors and raising funds without exposing shareholders to personal liability beyond their investment in the company. additionally corporations are often viewed as more stable by lenders, increasing their ability to secure loans. shareholder liability is limited to the amount they have invested, making investment less risky and potentially more attractive.
This financial structure was pivotal in driving industrial growth and the development of new industries. Moreover, the legal precedent set by cases such as the one involving the Bank of the United States highlighted the federal government's backing of these financial practices through the concept of implied powers.