Public Companies

A public company is one whose equity (shares) is available for the general public to purchase. This means than their shares are publicly traded on a stock exchange such as the NYSE or LSE, which means the value of the company is determined by the market.

Public companies are subject to more regulations that private ones, for example they must publish financial statements and shareholder reports every year. Taking a company public is done via an initial public offering (IPO) and usually results in a large payout for majority stakeholders. For management, the benefits and costs of going public must be weighed against in each other (i.e. less control, having to report to shareholders, more money, more possibility for investment etc.).

Free Resources

To continue learning and advancing your career, check out these additional helpful WSO resources:

• Retained Earnings
• Fraud Triangle
• Accounts Receivable Turnover Ratio
• Marginal Cost Formula
• Nash Equilibrium