Final answer:
Share prices of public companies are determined by market forces once the company has conducted an IPO. Shareholders in a public company vote for a board of directors who make key decisions, and their level of influence is proportionate to the amount of stock they own. The differentiation between private and public companies is crucial in understanding who is responsible for such decisions.
Step-by-step explanation:
The share price of a company is determined by the market, which means it is influenced by the forces of supply and demand on the stock market. Initially, a company might set its share price through an Initial Public Offering (IPO), based on factors such as the company's value, expected growth, and the market conditions. However, once the shares are available for trading on the stock exchange, their price can fluctuate based on investor perception, market trends, the company's financial performance, and overall economic conditions.
For public companies, the shareholders elect a board of directors to oversee major decisions such as when to issue stock, pay dividends, or reinvest profits. The more stock a shareholder owns, the more influence they have over these decisions through their voting power. It's important to differentiate between private companies, which do not have publicly traded shares, and public companies, where share price is a key consideration for both the company and its investors.