Public Company

AAA

DEFINITION of 'Public Company'

A company that has issued securities through an initial public offering (IPO) and is traded on at least one stock exchange or in the over the counter market. Although a small percentage of shares may be initially "floated" to the public, the act of becoming a public company allows the market to determine the value of the entire company through daily trading.

Public companies have inherent advantages over private companies, including the ability to sell future equity stakes and increased access to the debt markets. With these advantages, however, comes increased regulatory scrutiny and less control for majority owners and company founders.

INVESTOPEDIA EXPLAINS 'Public Company'

Once a company goes public, it has to answer to its shareholders. For example, certain corporate structure changes and amendments must be brought up for shareholder vote. Shareholders can also vote with their dollars by bidding up the company to a premium valuation or selling it to a level below its intrinsic value.

Public companies must meet stringent reporting requirements set out by the Securities and Exchange Commission (SEC), including the public disclosure of financial statements and annual 10-k reports discussing the state of the company. Each stock exchange also has specific financial and reporting guidelines that govern whether a stock is allowed to be listed for trading.

RELATED TERMS
  1. Private Finance Initiative - PFI

    A method of providing funds for major capital investments where ...
  2. Over-The-Counter Market

    A decentralized market, without a central physical location, ...
  3. Going Private

    A transaction or a series of transactions that convert a publicly ...
  4. Quasi-Public Corporation

    A type of corporation in the private sector that is backed by ...
  5. Initial Public Offering - IPO

    The first sale of stock by a private company to the public. IPOs ...
  6. Private Company

    A company whose ownership is private. As a result, it does not ...
Related Articles
  1. Investing Basics

    Who are Intel's (INTC) main competitors?

    Explore Intel's many competitors in its six operating segments. Explore different niche companies and companies that compete with Intel across several segments.
  2. Fundamental Analysis

    What are the differences between a 10-K report and a firm's own annual report?

    Understand the key differences between a corporation's own annual report and its 10-K report filed with the SEC and how investors should use each.
  3. Options & Futures

    Why Public Companies Go Private

    Privatization can give management more time to make money for investors, but at what cost?
  4. Mutual Funds & ETFs

    Could Your Company Be A Target For Activist Investors?

    Find out why certain companies are targeted by these investors.
  5. Investing

    When must a company announce earnings?

    The Securities & Exchange Commission (SEC) requires companies to file earnings reports no later than 45 days after the end of their first three quarters, and their quarterly and annual reports ...
  6. Entrepreneurship

    What does 'going public' mean?

    Going public refers to a private company's initial public offering (IPO), thus becoming a publicly traded and owned entity. Businesses usually go public to raise capital in hopes of expanding; ...
  7. Investing

    What is the full phrase for 'GmbH', and what do the words in this acronym mean in English?

    In Germany, there are two types of companies: publicly traded and privately held. The acronym 'GmbH', which is written after the name of the company, designates a company as private in Germany. ...
  8. Active Trading Fundamentals

    Are IPOs available to short sell immediately upon trading, or is there a time limit that must pass before ...

    The quick answer to this question is that an IPO can be shorted upon initial trading, but it is not an easy thing to do at the start of the offering. First, you have to understand the process ...
  9. Investing

    What are the three phases of a completed initial public offering (IPO) transformation process?

    While some large and successful companies are still privately-owned, many companies aspire toward becoming a publicly-owned company with the intent to gain another source of raising funds for ...
  10. Retirement

    IPO Basics Tutorial

    What's an IPO, and how did everybody get so rich off them during the dotcom boom? We give you the scoop.

You May Also Like

Hot Definitions
  1. Commodity

    1. A basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often ...
  2. Deferred Revenue

    Advance payments or unearned revenue, recorded on the recipient's balance sheet as a liability, until the services have been ...
  3. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  4. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  5. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
  6. Special Administrative Region - SAR

    Unique geographical areas with a high degree of autonomy set up by the People's Republic of China. The Special Administrative ...
Trading Center