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 is the average range for the price-to-earnings ratio in the electronics sector?

    Understand the difference between the primary market and the secondary market, and learn which investors are able to participate ... Read Answer >>
  2. What is the difference between a primary and secondary financial market?

    Learn about primary and secondary financial markets, how investors use these markets and the difference between primary and ... Read Answer >>
  3. When does a primary market become a secondary market?

    Understand the difference between the primary and secondary markets and why the secondary market is where investors go to ... Read Answer >>
  4. What's the difference between primary and secondary capital markets?

    Learn how in the primary capital market, securities are issued for the first time, while in the secondary market, investors ... Read Answer >>
  5. 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 >>
  6. 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 >>
Related Articles
  1. Trading

    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 a Secondary Offering?

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

    Why Do Companies Care About Their Stock Prices?

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

    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.
  7. Investing

    What's the Primary Market?

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

    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

    What is the Stock Market?

    A stock market is where shares in corporations are issued and traded. Stock markets are key components of a free market economy.
  10. Investing

    What Are Corporate Actions?

    Be a savvy investor - learn how corporate actions affect you as a shareholder.
RELATED TERMS
  1. Share Capital

    Funds raised by issuing shares in return for cash or other considerations. ...
  2. Impact Day

    The date on which a corporation makes a secondary offering of ...
  3. Secondary Offering

    1. The issuance of new stock for public sale from a company that ...
  4. Capital Markets

    Capital markets are markets for buying and selling equity and ...
  5. Secondary Market

    A market where investors purchase securities or assets from other ...
  6. Secondary Stock

    A stock that is considered riskier than blue chips because it ...
Hot Definitions
  1. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  2. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  3. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  4. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  5. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  6. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
Trading Center