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. Katie Couric Clause

    A slang term for a controversial proposed clause from a Securities ...
  5. Securities And Exchange Commission ...

    A government commission created by Congress to regulate the securities ...
  6. Private Company

    A company whose ownership is private. As a result, it does not ...
RELATED FAQS
  1. Why does financial accounting have to comply with GAAP?

    Not all financial accounting practices in the United States have to comply with generally accepted accounting principles ... Read Full Answer >>
  2. What are the main objectives of cost accounting?

    Cost accounting is distinct and separate from general financial accounting, which is regulated by generally accepted accounting ... Read Full Answer >>
  3. How do I determine what percentage of my portfolio to invest in blue chip stock?

    When determining what percentage of a portfolio should be invested in blue-chip stocks, identify your aversion to risk and ... Read Full Answer >>
  4. What is the difference between paid-up capital and share capital?

    In accounting, share capital is the sum of the par value of all issued shares. There are various other non-accounting uses ... Read Full Answer >>
  5. What is the simplest kind of company stock?

    There are many types of companies with publicly traded shares across a range of industries. Stock market investors are hoping ... Read Full Answer >>
  6. What stock factors should you consider when a company makes a CEO change?

    There are many reasons for public companies to make a change in CEO. The reason the current CEO is leaving may have an effect ... Read Full Answer >>
  7. Who are Intel's (INTC) main competitors?

    Intel Computer (INTC) is an American multinational corporation and is the largest publicly traded semiconductor chip maker ... Read Full Answer >>
  8. What are the differences between a 10-K report and a firm's own annual report?

    Publicly traded companies in the United States are required to file a host of documents, and two of the most important, for ... Read Full Answer >>
  9. What are the three phases of a completed initial public offering (IPO) transformation ...

    While some large and successful companies are still privately-owned, many companies aspire toward becoming a publicly-owned ... Read Full Answer >>
  10. Are IPOs available to short sell immediately upon trading, or is there a time limit ...

    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 ... Read Full Answer >>
  11. What is the full phrase for 'GmbH', and what do the words in this acronym mean in ...

    In Germany, there are two types of companies: publicly traded and privately held. The acronym 'GmbH', which is written after ... Read Full Answer >>
  12. 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. ... Read Full Answer >>
  13. When must a company announce earnings?

    The Securities & Exchange Commission (SEC) requires companies to file earnings reports no later than 45 days after the ... Read Full Answer >>
Related Articles
  1. Mutual Funds & ETFs

    Could Your Company Be A Target For Activist Investors?

    Find out why certain companies are targeted by these investors.
  2. Options & Futures

    Why Public Companies Go Private

    Privatization can give management more time to make money for investors, but at what cost?
  3. 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.
  4. Economics

    When Global Economies Converge

    The Divergences in global economic look very much like an explanation for what happened last year, though market observers continue to tout about it.
  5. Fundamental Analysis

    How to Calculate a Turnover Ratio

    A turnover ratio measures a mutual fund’s level of trading activity in a given time period, usually a year.
  6. Investing

    Do Record Stock Highs Signal A Top?

    Despite higher rates, U.S. stocks have been posting new records in recent weeks, despite investor concerns about slowing U.S. corporate profit growth.
  7. Investing Basics

    Understanding Open-End Funds

    An open-end fund is a type of mutual fund that does not limit the amount of shares it issues, but issues as many shares as investors are willing to buy.
  8. Investing Basics

    What is a Nominal Value?

    The nominal value of a security, such as a stock or bond, remains fixed for the duration of its life.
  9. Fundamental Analysis

    Calculating Future Value

    Future value is the value of an asset or cash at a specified date in the future that is equivalent in value to a specified sum today.
  10. Investing

    The Strong Dollar’s (Real) Toll On Tech Stocks

    A large portion of U.S. technology companies’ sales occur overseas, given the strong international business and consumer demand from many U.S. tech firms.

You May Also Like

Hot Definitions
  1. Mixed Economic System

    An economic system that features characteristics of both capitalism and socialism.
  2. Net Worth

    The amount by which assets exceed liabilities. Net worth is a concept applicable to individuals and businesses as a key measure ...
  3. Stop-Loss Order

    An order placed with a broker to sell a security when it reaches a certain price. A stop-loss order is designed to limit ...
  4. Covered Call

    An options strategy whereby an investor holds a long position in an asset and writes (sells) call options on that same asset ...
  5. Butterfly Spread

    A neutral option strategy combining bull and bear spreads. Butterfly spreads use four option contracts with the same expiration ...
  6. Unlevered Beta

    A type of metric that compares the risk of an unlevered company to the risk of the market. The unlevered beta is the beta ...
Trading Center