What is 'Public'

Public refers to anything that can be accessed by any person or group in the general population. In the context of investment and finance, the term is most commonly used to describe the securities available on an exchange or an over-the-counter market, and the population who trades those securities.

BREAKING DOWN 'Public'

Any securities on a public market can be bought and sold by anyone in the general population. In the 17th century, The Dutch East India Company became the first company to be listed on a global stock exchange, laying the groundwork for international commerce in the ensuing centuries.

Today, thousands of companies make shares and financial products available to be bought or sold by the public, and must follow the reporting requirements of the Securities And Exchange Commission, their shareholders, the press and other interested public parties. As a result, public companies tend to be more transparent and subject to much more public scrutiny than private companies.

Public Companies vs. Private Companies

Companies may trade shares on the stock market and become public through an initial public offering. This process, sometimes also called going public, permits the market to determine the value of a company as the public trades shares.

A company that has not yet gone public and is still owned by its founders, employees or other private entities is known as a private company. Typically, businesses begin as private companies and become publicly-traded as they grow and meet the regulatory requirements necessary to become publicly-traded.

Regulatory scrutiny increases significantly for publicly-traded companies, which must regularly report to both government entities and shareholders, but public trading provides many economic advantages to companies, including additional revenue generated through the shares traded on the marketplace.

When a company first goes public, the initial public offering is typically an opportunity for the company to access larger amounts of capital beyond the profits the business draws. A public company also increases liquidity for a company and distributes risk, ensuring that shareholders are able to distribute responsibility for potential debt and loss.  

Publicly-traded vs. Publicly-owned

Publicly-traded entities differ from publicly-owned entities in one key way: publicly-owned companies are owned by the government or the people of a nation or state and are also sometimes known as state-owned enterprises. By their nature, such companies do not trade on exchanges.

RELATED TERMS
  1. Public Company

    A public company issues securities through an initial public ...
  2. General Public Distribution

    A general public distribution is a primary market offering in ...
  3. Public Book (Of Orders)

    The public book (of orders) is an electronic list containing ...
  4. Private Sector

    The private sector is the part of the economy that is not state ...
  5. Public Key

    A public key is a cryptographic code that allows a user to receive ...
  6. Crossover Fund

    A crossover fund is an investment fund that holds both public ...
Related Articles
  1. Investing

    Methods used in valuing private companies

    There are a few methods for calculating the valuation of a private company. By using financial information from peer groups, we can estimate the valuation of a target firm.
  2. Insights

    The Ups and Downs of Initial Public Offerings

    Learn why initial public offerings (IPOs) aren't the best option for every company. Find out factors to consider before going public.
  3. Investing

    The Pros And Cons Of A Company Going Public

    Small companies looking for growth often use an initial public offering to raise capital. But going public brings both advantages and disadvantages.
  4. Managing Wealth

    IPO vs. Staying Private: What's Best for Your Biz?

    Taking your company public or staying private? Doing an IPO is costly and time-consuming; it also means you now have stockholders to answer to.
  5. Investing

    Initial Public Offering (IPO) Explained

    An initial public offering (IPO) marks the start of a company's publicly traded life. Find out why companies undergo IPOs, and how the process works.
  6. Insurance

    4 Signs A Private Company Is Going Public

    There are several signs that can indicate that a company is about to make the big leap. Find out what they are.
RELATED FAQS
  1. 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 Answer >>
  2. What are the advantages and disadvantages for a company going public?

    Companies often use an initial public offering (IPO) as a way to generate capital. There are both advantages and disadvantages ... Read Answer >>
  3. What is the difference between an IPO and a seasoned issue?

    Learn how companies issue IPO securities when they first go public and seasoned issue shares if they sell more stock in the ... Read Answer >>
Trading Center