Public Company

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A Public Company is a corporation that offers its securities (such as shares of stock) for sale to the general public, typically through a stock exchange.



References

2024

  • Perplexity.com
    • A public company, also known as a publicly traded company or publicly listed company, is indeed a corporation that offers its securities (most commonly shares of stock) for sale to the general public. These securities are typically traded on stock exchanges, such as the New York Stock Exchange (NYSE) or NASDAQ.
    • Key Characteristics of Public Companies

1. Public Ownership: Shares are available for purchase by any investor. 2. Regulatory Oversight: Subject to strict regulations by government agencies (e.g., SEC in the US). 3. Transparency: Required to disclose financial and operational information regularly. 4. Liquidity: Shares can be easily bought and sold on stock exchanges.

    • Advantages of Being a Public Company

1. Access to Capital: Can raise funds by issuing new shares. 2. Increased Visibility: Often leads to enhanced brand recognition. 3. Employee Benefits: Can offer stock options as part of compensation packages. 4. Acquisition Currency: Can use stock for mergers and acquisitions.

    • Disadvantages of Being a Public Company

1. Regulatory Burden: Must comply with complex and costly regulations. 2. Short-term Pressure: May face pressure to meet quarterly earnings expectations. 3. Loss of Control: Founders/management may have less control as ownership is diluted. 4. Public Scrutiny: Financial and operational details are available to competitors and the public.

    • Going Public Process: The process of becoming a public company is called an Initial Public Offering (IPO). This complex process involves:

1. Hiring investment banks 2. Filing extensive documentation with regulatory bodies 3. Marketing the offering to potential investors 4. Setting an initial stock price 5. Finally listing the stock on a public exchange

2024

  • Perplexity
    • The concept of a public company has a long and interesting history. Here are some key points about the early development of public companies:
    1. Origins in Europe

The first corporations that resembled modern public companies emerged in Europe in the 16th-17th centuries:

- In the 1600s, European countries began chartering companies to finance colonial expansion and trade[1][5].

- The Dutch East India Company, founded in 1602, is widely considered the world's first publicly traded company[1][5]. It issued shares and paid dividends to investors.

- The Amsterdam Stock Exchange was created in 1611 to facilitate trading of Dutch East India Company shares[6].

    1. Early Features

These early public companies had some key characteristics:

- They issued shares to raise capital from investors[1][5]. - Shares could be bought and sold by the public[1]. - They had limited liability, protecting shareholders' personal assets[2]. - They were granted charters by governments for specific purposes[2].

    1. Development in Britain and America

- In the late 1600s, shares began being traded in London coffee houses[7]. - The London Stock Exchange was formally established in 1801[7]. - America's first corporations emerged in the 1790s after independence[4]. - The New York Stock Exchange traces its origins to 1792 with the Buttonwood Agreement[8].

    1. Early Regulations

- Initially there was little regulation, leading to speculation and fraud[1][6]. - Governments gradually introduced more oversight and rules for public companies[7]. - By the early 1900s, requirements like audited accounts and public filings were introduced[7].

  • Citations:
[1] https://bebusinessed.com/history/history-of-the-stock-market/
[2] https://newint.org/features/2002/07/05/history
[3] https://yalebooks.yale.edu/2015/08/11/the-worlds-first-corporations/
[4] https://www.investopedia.com/ask/answers/041515/what-history-corporations-america.asp
[5] https://www.worldsfirststockexchange.com/2020/10/15/the-worlds-first-ipo/
[6] https://www.sofi.com/learn/content/history-of-the-stock-market/
[7] https://motoroaming.com/the-stock-market-a-brief-history/
[8] https://www.nyse.com/history-of-nyse