Public corporation refers to companies whose stocks are traded publicly on a stock exchange or over the counter market. The general public gets the opportunity to share ownership of the company through the purchase of shares. For a company to trade publicly, it has to have a proven profitability record, which is an assurance to the potential shareholders that they will eventually have their money back. This essay describes the objectives of public corporations, which are the reasons for the decision of going public.
The primary objective for companies to go public is to raise money from the sales of the stock to aid its operation. The shareholders become part of the company owners while their contributions are channeled towards the improvement of the activities within the company. This method of raising money is a way of avoiding bank loans. The profits made afterward are shared among the shareholders as dividends as the company retains a certain percentage.
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Secondly, the company aims at spreading the risk of ownership by sharing the ownership of the corporation among the members of the public. This means that if the company incurs losses, the aftermath will be divided among the many shareholders, which is reasonable compared to taking the loss as a sole proprietor. The shared risks have low impacts on the company, as every shareholder get their share per the number of shares held.
Lastly, Corporate Social Responsibilities (CSR) is also a significant objective for public corporates. CSR entails balancing the revenues with social obligations with the clients, employees, partners and the community at large. This arrangement improves the company's overall rating to the general public resulting in a possible increase in productivity. The social responsibility becomes easier if shared among the shareholders, more than if a sole proprietor would undertake it.
In conclusion, going public for companies entails various objectives which aim at improving the company status. For instance, raising money for upgrading the operations, sharing ownership risks and sharing Corporate Social Responsibilities are some of the primary objectives cited by companies wishing to go public. In many instances, a public company stands a better chance to thrive than private companies.
