A:

The short answer is "no". To understand why, recall that the stock market is actually comprised of two markets - a primary market and a secondary market.

In the primary market, a company issues shares to investors who remit capital to the company for the shares. It is only at this time that the company receives capital for their shares (this is the process of equity financing), and once the shares are issued at the specified offering price, the company receives their cash.

In the secondary market, investors who originally bought the issue in the primary market sell their shares to other investors, who in turn hold their shares and eventually sell them to other investors as well. It is this secondary market that is actively followed by the business media and produces the daily price changes in stocks. Because this market only involves investors buying and selling securities from other investors, public companies themselves do not see direct profits or losses from price changes.

However, it is still advantageous for a public company to have a strong share price because it increases the company's market capitalization and thus its ability to issue more equity shares at relatively high offering prices (effectively allowing it to raise equity capital cheaply).

To learn about the details of initial public offerings, read The Murky Waters Of The IPO Market.

RELATED FAQS
  1. What's the difference between primary and secondary capital markets?

    In the primary market, investors buy securities directly from the company issuing them, while in the secondary market, investors ... Read Answer >>
  2. Who trades in primary and secondary capital markets?

    Understand how primary and secondary markets function in the trade of financial securities between investors, and learn how ... Read Answer >>
  3. What securities does the primary market deal with?

    Find out what kinds of securities are traded on the primary market, including who can participate in trading and the basics ... Read Answer >>
  4. What constitutes a secondary market?

    Find out what constitutes a secondary market, and learn why that term can be applied far more broadly than you might initially ... Read Answer >>
Related Articles
  1. Investing

    Comparing Primary And Secondary Capital Markets

    In the primary capital market, investors buy directly from the issuing company. In the secondary market, investors trade securities among themselves.
  2. Investing

    What is the Secondary Market?

    The secondary market is where investors purchase securities or assets from other investors, rather than from the issuing companies themselves.
  3. Investing

    What's the Primary Market?

    The primary markets are where investors can get first crack at a new security issuance.
  4. Investing

    What's a Secondary Offering?

    A secondary offering is the issuance of new stock from a company that has already made its initial public offering.
  5. Investing

    A Look At Primary And Secondary Markets

    Knowing how the primary and secondary markets work is key to understanding how stocks trade.
  6. Investing

    Why Do Companies Care About Their Stock Prices?

    Read on to learn more about the nature of stocks and the true meaning of ownership.
  7. Investing

    What are Issued Shares?

    Issued shares are the amount of authorized stocks a company’s shareholders buy and own. The annual report shows the number of outstanding shares.
  8. Insights

    A Breakdown on How the Stock Market Works

    Learn what it means to own stocks and shares, why shares exist, and how you buy and sell them.
  9. Investing

    Financial Markets: Capital vs. Money Markets

    Find out the similarities and differences between these two commonly used components of the financial markets.
RELATED TERMS
  1. Secondary Market

    A market where investors purchase securities or assets from other ...
  2. Impact Day

    The date on which a corporation makes a secondary offering of ...
  3. Capital Markets

    Capital markets are markets for buying and selling equity and ...
  4. Secondary Offering

    1. The issuance of new stock for public sale from a company that ...
  5. Secondary Stock

    A stock that is considered riskier than blue chips because it ...
  6. Primary Offering

    The first of issuance of stock for public sale from a private ...
Hot Definitions
  1. Leverage Ratio

    Any ratio used to calculate the financial leverage of a company to get an idea of the company's methods of financing or to ...
  2. Two And Twenty

    A type of compensation structure that hedge fund managers typically employ in which part of compensation is performance based. ...
  3. Market Capitalization

    The total dollar market value of all of a company's outstanding shares. Market capitalization is calculated by multiplying ...
  4. Expense Ratio

    A measure of what it costs an investment company to operate a mutual fund. An expense ratio is determined through an annual ...
  5. Mezzanine Financing

    A hybrid of debt and equity financing that is typically used to finance the expansion of existing companies. Mezzanine financing ...
  6. Long Run

    A period of time in which all factors of production and costs are variable. In the long run, firms are able to adjust all ...
Trading Center