system
Given the following post, respond as if you're commenting on Reddit:
human
[Economics] After the IPO, how does having publicly traded stock benefit a corporation?

Are there any benefits to a corporation being traded publicly beyond initially raising funds? Catering to shareholders just seems to be a headache after that, especially for an established company which has been public for many years.
gpt
There are practical benefits and more theoretical benefits.

In the practical category, it makes it easier for the company to raise money, even after the IPO. Shares that can be publicly traded are worth more, because people who buy them know they will be easier to resell, and because more people are eligible to buy them in the first place. So, if a company needs to sell shares a year after the IPO, they can most likely get a better price than they could in a private placement.  This is also good for shareholders, since it allows them to more easily sell their shares if and when they want to; whereas with a close corporation, you have no real way to get your money out. And since you can't readily get your money out of a close corporation, you might be less willing to invest in the first place.


In the more theoretical category, it probably leads to better management of companies, because public markets provide information. Essentially, the public price of a stock is a real-time, constant opinion poll that tells company managers what thousands (millions even) of people think of the job they are doing.  If management makes a boneheaded decision, the share price goes down instantly and the managers know right away that lots of people think they are doing a bad job; and vice-versa if they make a positive announcement.  

Also in the more theoretical category, public listing probably makes companies more valuable because public companies are more heavily regulated. For example, under Sarbanes-Oxley the executives of a public company face jail time if the company's accounting statements are misleading, so we would expect that these executives will be extra-careful to make sure that the accounting statements are accurate. But Sarbox doesn't apply to privately held corporations, so you might worry more about whether you were being cheated and thus be less willing to invest.