Question

Discuss the advantages of listing a corporation on the stock exchange, such as the ASX?

Answer 1

Stock Exchanges allows businesses access to capital and the opportunity to enhance their visibility and public image. Savvy businesses can harness the power of stock exchanges to grow and enhance their companies. While significant financial and regulatory costs are associated with being listed on a stock exchange, the benefits far outnumber the disadvantages. Some of the many benefits that come with being listed on a major stock exchange such as ASX include Access to Capital, Enhanced Visibility and Increased Legitimacy amongst clientele and future employees alike.

ACCESS TO CAPITAL

One of the major impediments to business growth was a lack of affordable capital. Companies listed on a stock exchange can quickly raise affordable capital by issuing more shares for investors to purchase. The Capital raised from issuance of shares can be used to help the company grow and pay for different business costs.

ENHANCED PROFILE

Companies listed on a stock exchange are much more recognizable and visible than their privately held counterparts. The increased visibility that comes with being listed on an exchange can help a company attract new clients and customers, and it draws press attention that might be difficult and expensive for the company to draw on its own.

ABILITY TO ATTRACT BETTER EMPLOYEES

High quality employees are attracted to employers that have name recoginition and visibility. Stock exchanges can help companies become household names and better attract employers capable of making the company more profitable. Because of the increased access to capital, companies are also able to better compensate employees to keep them from moving to competitors.

REDUCTION OF THE COST OF OTHER CAPITAL

Going public reduces the costs of obtaining capital through bank loans. Banks view publicly traded companies as less of a credit risk than their privately held counterparts, because publicly traded companies have access to other capital and the auditing requirements for public companies make their financial condition more transparent.