Final answer:
A public company is a corporation that has sold shares of stock to the general public, allowing investors to become part owners. Shareholders vote for a board of directors who governs the company and hires executives for daily operations. Public companies have access to more capital via the sale of stock or bonds but must adhere to strict reporting and regulatory requirements.
Step-by-step explanation:
A public company is a business entity that has decided to sell its stock, which in turn can be bought and sold by financial investors on the public stock market. The ownership of a public company is distributed amongst its shareholders, who may number in the thousands or even millions. These shareholders have limited liability for the company's debts but are entitled to a share of the profits and, more importantly, they have the right to vote for a board of directors. This board is responsible for making high-level decisions and hiring top executives to manage the company on a daily basis.
Public companies raise capital for their operations and new investments by selling stock or issuing bonds. The process allows them to access funds that can help grow the business more significantly than if they remained privately-held. The more stock an individual owns, the more influence they hold in the company, as they have more votes to cast for the board of directors.
Being a publicly traded company comes with several benefits and regulations. Such companies are subject to strict reporting requirements by securities regulators to protect investors' interests and maintain transparency in the financial markets. Shareholders benefit from the potential for stock appreciation and dividends but also bear the risk of market volatility and potential losses.