What are the major disadvantages?

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What are the major disadvantages?

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What are the major disadvantages?

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Explanation

Disadvantages of going public :

Increase in cost: A listed company has to file regular returns with the securities and exchange commission (SEC) that increases the cost and manpower requirement.
Increase in risk: A listed company bears risk through wide competition with other big companies in the market in its initial stages when its securities are not frequently applied by investors.
Disclosure of accounts: A public trading company has to disclose its accounts and financial statements in public as per the requirements of securities and exchange commission (SEC).
Reduces ownership control: Inviting outside investors to participate in company's ownership dilutes the ownership stake of inside owners.

Verified Answer

Disadvantages of going public:

Going public increases the cost and formalities of filing regular returns.
A public company has to face the wide competition in the market.
A public company has to disclose its records widely to the public.
Going public dilutes the ownership stake of inside owners.

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