Final answer:
The sale of additional shares by a publicly traded company is called a secondary offering. Unlike initial public offerings (IPOs), these subsequent sales are for raising additional capital or allowing initial investors to cash out. Shareholder-elected boards make decisions for the company, with voting power proportional to shares owned.
Step-by-step explanation:
The sale of additional shares in firms that are already publicly traded is referred to as a secondary offering. This is distinct from a firm's first stock sale to the public, known as an initial public offering (IPO). Firms use secondary offerings to raise additional capital after the IPO. When a venture capital firm or other investors sell their shares in a secondary offering, they convert their part ownership into cash, which can be reinvested or used according to their financial strategies.
When a company sells its stock to the public, it does not promise a specific rate of return. Instead, the value of the shares is determined by the market and the company's performance. Corporate decisions in public companies are made by a board of directors. These directors are elected by shareholders, with each share of stock providing a vote. The more shares a shareholder owns, the more influence they have over the board elections and, subsequently, the decisions made by the firm.