Disadvantages of floatation of new shares, Finance Basics

Disadvantages of Floatation of New Shares

1. The cost of getting a quotation is high, mainly when a new issue of shares is completed and the company is small. It means that substantial costs are fixed and so are relatively greater for small companies. The annually cost of keeping the quotation may be high also because of such things as increased disclosure, keeping a larger share register, printing more annually reports.

2. The improved disclosure requirements may be disliked via management.

3. The market-determined price and the greater accountability to shareholders such comes along with its concerning the company's performance may not be liked through management.

4. Control of a particular group of shareholders may be diluted through permitting a proportion of shares to be held via the public.

5. There will be a greater likelihood of particular the subject of a takeover bid and it may be hard to defend it along with wide share ownership.

6. Management situations, management workers provide themselves more salaries because of prosperity obtained.

Posted Date: 2/1/2013 1:39:35 AM | Location : United States

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