Publicly Held Corporation Flashcards, test questions and answers
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What is Publicly Held Corporation?
A publicly held corporation is a type of business entity that is owned by multiple shareholders and traded on a public stock exchange. This type of company is different from private companies, which are owned by one or more individuals and may not be traded on the public stock exchange. Publicly held corporations offer certain benefits to their shareholders, such as liquidity (the ability to quickly convert shares into cash), diversification (the opportunity to spread risk across multiple investments), and potential for growth through capital gains. They also have certain drawbacks, including greater vulnerability to market fluctuations and potential conflicts of interest between management and shareholders. Publicly held corporations must comply with stringent regulations set forth by the Securities and Exchange Commission (SEC) in order to remain publicly traded companies. These include regular filing of financial reports with the SEC, disclosure of any material information that could affect the value of their securities, strict requirements regarding executive compensation packages, insider trading laws, shareholder rights plans, and other matters related to corporate governance. In addition to these requirements, publicly held corporations must comply with various accounting standards as established by Generally Accepted Accounting Principles (GAAP). The size of a publicly held corporation can vary greatly depending on its ownership profile large multi-nationals like ExxonMobil or JPMorgan Chase may have millions of individual shareholders while smaller companies may only have a few hundred owners. Regardless of size however, all publicly held corporations share common characteristics: they are managed by professional directors who oversee the operations; they provide liquidity for investors through trading in equities; they are subject to various laws governing securities trading activities; and they require regular reporting about their financial performance in order to remain compliant with applicable regulations. Publicly held corporations offer unique advantages when compared with private businesses namely access to capital markets that allow them access larger amounts of financing than would be available privately – but also come with significant risks due to their complex regulatory environment and susceptibility to market movements which can render investments less profitable than expected. Ultimately though, investors must weigh up these risks against potential returns when deciding whether investing in a particular company is right for them as always it pays off if you do your research first.