what is the benefit of listing a company in stock exchange?

Answer 1

If you own a company and want to raise money, to raise the money you can go to a bank or a stock exchange. the difference is that in bank,

a) the money they give, will be limited, since the banks want to make sure you will return their money, and will only give as much as what your enterprise is worth (in terms of assets etc..)

b) and they will give you the money, only if the risk of default is low. They banks ensure this by asking for a collateral (or security (like lands, equipment etc..)) so that they can recover the money incase of default.

In a stock exchange
a) the amount of money you can raise is not limited, by your networth, since the investors/fund managers who give your money to buy your shares, understand the risks. they can give you as much as 10 times your networth, if they feel your enterprise is in a sunrise sector.

By valuing your share, they value your company on a day by day basis, and it is possible that they value your company far more than what your actual net worth is (i.e. worth as determine by the assets you own). This would be helpful in preventing take overs of your company or using this inflated worth to buy other companies having higher networth than yours, (but whose share price is low)

In short compared to banks, stock exchange is a bigger source of money, and is a way to quickly increase the valuation of your company

Offcourse all this advantages in stock exchange, is possible only if your company is profitable and shows a consistent track record in a sunrise sector (a sector which is growing)

Answer 2

Listing on a stock exchange is a form of financing for a company

Listing on a stock market enables a company to sell itself (wholly or in part) through the issuance of shares. The proceeds from the sale of shares can then be used by the organisation to finance its business needs.

Listings are also beneficial, as they raise the corporate profile of the company. Prior to listing a company will try to reach out to potential investors through a prospectus and other publicity mechanisms.

A company which lists may also garner advantages for itself in the future. A company may be able to access better sources of capital in the future due to its better corporate profile (as mentioned above). Furthermore financial institutions may be more confident in the financial probity of a listed company, since listing usually involves rigorous financial reporting procedures on the company's cash flows, overall financial health etc.

Answer 3

There are many reasons, one is to create liquidity for your stocks, two is to create believability for investors in the first place, third is to see that the value the investors are prepared to pay for your stocks helps you to decide on how you should run your company and how should not a type of yard stick, fourth is to create reliability of your operations to the economy as a whole, fifth is transparency of your operations and mission. I hope that is it.

Answer 4

The obvious thing is that the shares of the company get to be traded. If u r not listed, u can't raise funds by a public issue...

Answer 5

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