BS-Types of business organisation, page no 46-47
What are public corporations:
Public corporations are companies that are owned by the general public through shares of stock that are traded on a stock exchange. These corporations are typically large businesses that have decided to raise money from investors by issuing shares that anyone can buy and sell. Shareholders are part-owners of the company and may receive profits in the form of dividends. Public corporations are also subject to regulations and must disclose their financial information regularly.
Advantages of Public Corporations:
Access to Capital: Public corporations can raise large amounts of capital by selling shares to the public, which can be used for expansion, research, or other investments.
Increased Public Awareness: Being listed on a stock exchange increases a company's visibility and public profile, potentially leading to better brand recognition and more business opportunities.
Liquidity for Shareholders: Shareholders can easily buy and sell their shares on the stock market, providing flexibility and liquidity for investors.
Disadvantages of Public Corporations: Regulatory Burden: Public corporations must comply with complex regulations and reporting requirements, which can be time-consuming and expensive.
Loss of Control: Original owners or founders may lose some degree of control over the company as shareholders have voting rights and can influence decision-making.
Market Pressure: Public companies are often under pressure to meet short-term financial goals to please shareholders, which may lead to decisions that are not in the company's long-term best interest.
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What are the regulatory requirements that public corporations must adhere to?
How does the governance structure of a public corporation differ from that of a private company?
What role do shareholders play in the decision-making process of a public corporation?
How do public corporations ensure transparency and accountability to their investors?
What are some examples of successful public corporations, and what factors contributed to their success?
How do public corporations manage the balance between short-term profits and long-term growth?
1. Imagine a technology startup is considering going public to raise funds for expansion. What advantages might the company gain by becoming a public corporation, and what potential drawbacks should the founders consider before making this decision?
2. A public corporation faces increasing pressure from shareholders to deliver higher quarterly profits. Explain how this market pressure might affect the company’s long-term strategies and decision-making. Provide examples of how the company might prioritize short-term gains over sustainable growth.
3. Suppose a public corporation faces a new regulatory requirement that increases its financial reporting obligations. Discuss how this added regulatory burden might impact the corporation’s operations and resources, and consider the potential advantages and disadvantages for shareholders and the general public.