Financial Resource Liquidity Profile Institutionalization Additional Public Offerings
Conditions which lead a company to a public offering decision may vary. By offering its stocks to the public and ensuring its stocks to be traded on an organized market, a company, first of all, utilizes a significant financial resource.
Financial resource
Offering their stocks to the public at a premium price, companies use a low-cost and long-term resource relative to alternative financing methods.
Moreover, companies may use up loans and issue debt securities using their stocks as security to supply financing after their stocks are offered to public and start to be traded on the Exchange.
Liquidity
The trading of free-float stocks on an organized market and in transparency at any time desired and at such prices formed by real supply and demand enables to supply liquidity and provides existing shareholders with an important capability.
Widespread Publicity at Home and Abroad
Various information about the companies whose stocks are traded on the Exchange are delivered to investors at home and abroad through data suppliers, press and publication institutions and other visual media institutions within the framework of the transparency and public disclosure functions of the Exchange.
This dissemination of information helps companies and company products to gain publicity at home and abroad. The advantages given by this wide publicity provide the opportunity to cooperate, to establish joint ventures, and to engage in similar businesses with companies operating in the same sector at home and abroad.
Institutionalization
Companies in our country are family corporations as a general characteristic. Inevitably, the lifetime of the company is limited to the lives of the founders or the family members having influence in the management.
The public offering and listing of stocks on the stock exchanges take place within a process involving CMB and ISE examinations. In addition, after the listing of their stocks, companies have their financial statements inspected by independent auditors in certain intervals, inform their shareholders and the public regularly, and are subject to continuous inspection by CMB and ISE.
In this context, with public offering and the listing of their stocks on the ISE, companies speed up their institutionalism process through capital market inspection mechanisms, and achieve modern management techniques in a considerably shorter period of time.
Secondary Public Offering Opportunity
In addition to the initial public offering, the “Secondary Public Offering" provides a re-financing opportunity to companies which can offer their stocks later while their stocks are being traded in order to meet their capital and similar requirements provided they restrict the pre-emptive rights of existing shareholders.
Insufficiency of capital accumulation in developing countries has an adverse effect on the economic development of the countries. In this frame, companies face difficulties in finding the necessary capital to grow, develop, invest and compete against their rivals in a globalizing world. The contribution of financing obtained from the capital market by a listed company has recently gained much importance in solving the funding problems.