efb201lect7in141
EFB201 Lecture 7 –
Equity Markets
Reading –
Viney chapter 6 p181-193, chapter 7
Tutorial Questions –
Viney chapter 6 Essay Questions 1,2,6,7
Viney chapter 7 Essay Questions 1,2,9,10
Additional tute questions (on Blackboard
Site)
1
Outline
Background to Listed Companies
Initial Public Offerings (IPO’s)
Ordinary Shares
Equity Funding Alternatives
Share Returns and Valuation
Introduction to the ASX
2
Background to Listed Companies
A corporation is a company that is a legal entity established under the corporations law of a nation-state.
The shares of a publicly listed corporation are listed on a stock exchange and the main source of equity funding, the ordinary share, is quoted in the share market.
There are a number of features that distinguish a publicly listed corporation:
1.Ownership is generally widely dispersed among a number of shareholders and share trading does not affect the continuing existence of the business.
2. The objectives and policies of the corporation are determined by a board of directors, the members of which are elected at a general meeting of shareholders.
The board or directors appoint an executive management group that is responsible for achieving the objectives and policies of the organisation through the management of the day-to-day financial and operational affairs of the company.
Executive management is responsible to the board of directors and the board of directors reports to shareholders.
3.The liability of shareholders for the debts of the business is limited to the issue price of the share. If a sole proprietorship, a partnership or an unlimited company are unable to meet their obligations to creditors, the creditors have a legal right to recover the amount owing by taking possession of the personal assets of the owners.
Advantages of a publicly listed company
1. In a deep and liquid share market, large amounts of money can normally be raised through a wide range of investors.
2. Shareholders can reduce the risk of share
Equity Markets
Reading –
Viney chapter 6 p181-193, chapter 7
Tutorial Questions –
Viney chapter 6 Essay Questions 1,2,6,7
Viney chapter 7 Essay Questions 1,2,9,10
Additional tute questions (on Blackboard
Site)
1
Outline
Background to Listed Companies
Initial Public Offerings (IPO’s)
Ordinary Shares
Equity Funding Alternatives
Share Returns and Valuation
Introduction to the ASX
2
Background to Listed Companies
A corporation is a company that is a legal entity established under the corporations law of a nation-state.
The shares of a publicly listed corporation are listed on a stock exchange and the main source of equity funding, the ordinary share, is quoted in the share market.
There are a number of features that distinguish a publicly listed corporation:
1.Ownership is generally widely dispersed among a number of shareholders and share trading does not affect the continuing existence of the business.
2. The objectives and policies of the corporation are determined by a board of directors, the members of which are elected at a general meeting of shareholders.
The board or directors appoint an executive management group that is responsible for achieving the objectives and policies of the organisation through the management of the day-to-day financial and operational affairs of the company.
Executive management is responsible to the board of directors and the board of directors reports to shareholders.
3.The liability of shareholders for the debts of the business is limited to the issue price of the share. If a sole proprietorship, a partnership or an unlimited company are unable to meet their obligations to creditors, the creditors have a legal right to recover the amount owing by taking possession of the personal assets of the owners.
Advantages of a publicly listed company
1. In a deep and liquid share market, large amounts of money can normally be raised through a wide range of investors.
2. Shareholders can reduce the risk of share