Final answer:
Starting a company with authority to appoint officers involves corporate governance. If selling stock to become publicly traded, it is known as a public company. Shareholders own public companies and elect a board of directors to oversee management.
Step-by-step explanation:
The person starting a company and deciding on the authority to designate officers, whether to be privately held or publicly held, and appointing its officers is engaging in corporate governance. If the company decides to sell stock and become available for purchase by financial investors, it becomes a public company. In a public company, shareholders own the company and are a diverse group that can range from thousands to millions of individuals. Shareholders vote for a board of directors, who are responsible for hiring the top executives who manage the company's daily operations. The amount of stock a shareholder owns determines the number of votes they can cast for the board.
In contrast, a private company is typically owned by its active managers or owners. A sole proprietorship is a private company owned by an individual, while a partnership is a company owned by a group. Corporate governance refers to the systems in place intended to oversee the actions and decisions of top executives within a company.