Question

Advantages of a company going public include all of the following, EXCEPT that a. publicly traded...

Advantages of a company going public include all of the following, EXCEPT that

a. publicly traded stock provides valuable signaling information concerning the health of the company.
b. it is easier to use public stock as currency to acquire other companies.
c. it might need more capital in order to finance growth.
d. the original investors and the management team would like liquidity.
e. management must answer to outside shareholders.

Homework Answers

Answer #1

Management is liable for public disclosure and answerable to external shareholders because the company is a listed company and the external shareholders are also having the ownership of the company and they are also entitled to have answers from lmanagement so this is not an advantage associated with going public.

Other advantages will be more capital and more liquidity along with fair valuation and publicly traded stocks used as currency.

Correct answer will be option (e) management must answer to outside shareholders.

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