Public Company

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.

• Context:
  • It can (typically) be subject to Regulatory Compliance requirements that are more stringent than those for private companies.
  • It can (often) be required to publish Financial Statements to provide transparency to its shareholders.
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  • It can range from being a large Multinational Corporation to being a Small Public Company listed on a local Stock Market.
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  • It can be influenced by Market Forces such as supply and demand, investor sentiment, and economic indicators.
  • It can be scrutinized by Investors, Analysts, and Media more frequently than its private counterparts.
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• Example(s):
  • an Industry-Specific Public Company such as:
    • a Hershey Company, a public company in the food and confectionery sector, listed on the NYSE, focusing exclusively on consumer products.
    • a Boston Beer Company, a craft beverage public company listed on the NYSE, specializing in alcoholic beverages.
    • a Weyerhaeuser Company, a public firm in the timber and wood products sector, traded on the NYSE, focusing on forestry.
  • a Public Financial Corporation such as:
    • Charles Schwab Corporation, a financial services firm publicly traded on the NYSE, known for brokerage and wealth management.
    • Goldman Sachs Group, Inc., a multinational investment bank listed on the NYSE, focusing on institutional and retail banking.
  • a Public Retail Corporation like:
    • Macy’s Inc., a department store chain listed on the NYSE, demonstrating the dynamics of a traditional brick-and-mortar retail company.
    • Walmart Inc., a global retail giant listed on the NYSE, operating in a diverse range of consumer goods and grocery segments.
  • a Public Healthcare Corporation like:
    • Moderna, Inc., a biotechnology company listed on the NASDAQ, focusing on innovative therapies and mRNA technologies.
    • Pfizer Inc., a major pharmaceutical company listed on the NYSE, known for its broad range of health and medical products.
  • a Utility Public Corporation such as:
    • Duke Energy Corporation, listed on the NYSE, providing essential energy services with a stable dividend profile.
    • American Electric Power Company, Inc. (AEP), a major utility public company listed on the NASDAQ, providing electric power services.
  • a Real Estate Investment Trust (REIT) like:
    • American Tower Corporation, a public REIT listed on the NYSE, focusing on communication infrastructure.
    • Prologis, Inc., a public REIT traded on the NYSE, specializing in logistics and warehouse management.
  • a Technology Public Corporation such as:
    • Apple Inc., a global technology leader listed on the NASDAQ, specializing in consumer electronics.
    • NVIDIA Corporation, a public company listed on the NASDAQ, focused on graphics processing units and AI technology.
  • Historical Public Companies, such as:
    • Honor dels molis del Bazacle, a French company established in 1372 to operate water-powered mills, considered an early precursor to public companies due to its ownership structure and trading of shares.
    • Mudaraba Partnership in the medieval Islamic world, representing a profit-sharing arrangement that allowed multiple investors to pool resources, sharing both profits and losses, similar to joint-stock structures.
    • Guanghui Salt Shop founded in 1425 during the Ming Dynasty in China, a salt company with multiple shareholders and a governance structure that resembled early corporate models.
    • British East India Company, established in 1600, which later became publicly traded and played a significant role in trade and colonization, laying the foundation for modern joint-stock companies.
    • Dutch East India Company (VOC) that was founded in 1602 and is widely considered the world’s first publicly traded company, having issued shares on the Amsterdam Stock Exchange and paid dividends to its investors.
    • Yodoya Exchange, founded in early 17th century Japan, which was one of the first financial exchanges in the country, allowing rice traders to buy and sell rice futures, acting as a precursor to modern commodity trading.
    • French East India Company formed in 1664, modeled after the earlier Dutch and British companies, to expand French influence in Asia through trade and military presence.
    • Mitsui Trading House established in 1673, which evolved into one of Japan’s largest corporate conglomerates. While not a public company in the modern sense, it incorporated early features of joint ownership and corporate governance.
    • Shroff Banking House in pre-colonial and early colonial India, where family-owned banking entities operated with some characteristics of joint-stock companies, including shared investment and risk.
    • Bank of North America, established in 1781, which served as one of the earliest banking corporations in the United States and played a crucial role in the nation's early financial system.
    • Howqua’s Hong in late 18th to early 19th century China, a powerful trading company in Canton with multiple investors, which engaged in international trade and held substantial influence, though it was not a public company in the Western sense.
    • London Stock Exchange formally established in 1801, providing an organized venue for trading shares of companies, building on earlier informal exchanges in coffee houses since the late 17th century.
    • Boston Manufacturing Company founded in 1813, which is considered the first industrial corporation in the United States, introducing integrated textile manufacturing.
    • Kongsi business organization in Southeast Asia, particularly prominent in the 18th-19th centuries among Chinese communities, which featured shared ownership and collective risk management, reflecting elements of early corporate practices.
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• Counter-Example(s):
  • Private Companys, which do not offer their securities to the general public and are not required to disclose financial information publicly.
• See: Stock Exchange, Private Company, Financial Disclosure, Corporate Governance.

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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. 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. 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. 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. 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

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