Definition
In finance, ‘Listed’ refers to a status that a company attains when its shares are officially traded on a regulated stock exchange. Being ‘Listed’ provides companies with the potential to raise additional capital by issuing more shares to the public. It also facilitates better liquidity for shareholders because the shares can be bought and sold freely on the open market.
Phonetic
The phonetics of the keyword “Listed” is /ˈlɪstɪd/.
Key Takeaways
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Importance
The term “listed” in business or finance is important because it refers to a company’s shares being on the official list of stocks that are traded on a particular stock exchange. When a company is listed, its shares are publically traded and can be purchased by individual and institutional investors. This provides the company with access to capital for expansion through selling more shares. Being listed also enhances a company’s credibility and visibility in the market, attracting potential investors, partners, and customers. For investors, listed companies are subject to stringent rules and regulations which demand transparency, providing an added level of trust and confidence. Overall, “listed” signifies a significant milestone in a company’s growth and plays a crucial role in the functioning of the capital market.
Explanation
The term “Listed” refers to the formal inclusion of a financial instrument, such as stocks or bonds, on a trading exchange where it can be bought and sold by investors. The purpose of getting listed on an exchange is for a company to raise capital either for starting up, expanding, or for ongoing operations. By selling shares, corporations gain access to a vast pool of investors’ capital. These investors then gain part-ownership of the company, proportional to the size of their shareholding, with the expectation of receiving a return on their investment through dividends or increased share value.A company being ‘listed’ also gains credibility and prestige, as it needs to meet the exchange’s listing requirements, including financial thresholds and governance standards, strongly signaling transparency, regulatory compliance, and sound financial management. Moreover, with shares listed and traded on a recognized exchange, these are more liquid for investors, who are better able to buy and sell at their discretion. This enhanced liquidity is a key commercial consideration for both companies seeking to raise capital, and for investors looking to mitigate risks associated with holding an illiquid investment, thus bolstering the overall financial ecosystem.
Examples
1. New York Stock Exchange (NYSE): One example of a listed security is a company’s stock that is traded on the NYSE. For instance, Amazon Inc. is listed on the NYSE under the ticker symbol AMZN. This means they have met the necessary financial requirements and follow corporate governance and disclosure practices required by the NYSE.2. London Stock Exchange (LSE): BP plc, a multinational oil and gas company, is listed on the London Stock Exchange. That means investors can buy or sell shares of BP through the exchange, expecting that all the necessary financial and regulatory requirements have been met by the company.3. NASDAQ: Apple Inc. is another example. It is listed on NASDAQ under the ticker symbol AAPL. Being listed means investors have the assurance that the company has complied with NASDAQ’s strict listing requirements, regarding financial health, corporate governance and transparency.
Frequently Asked Questions(FAQ)
What does the term Listed mean in finance?
In finance, Listed refers to a company’s shares being on the list of stocks that are traded on a particular stock exchange. When a company is listed, it means it has met certain requirements set by that exchange.
What are the benefits of a company being listed?
Listed companies gain more exposure and credibility, which may attract more investors. They also have access to a larger pool of capital, and may find it easier to raise funds for business expansion.
How does a company get listed?
A company needs to meet certain financial, governance, and ethical requirements to be listed on a stock exchange. It also needs to undergo an Initial Public Offering (IPO) process, whereby its shares are sold to the public for the first time.
Are all companies listed?
No, not all companies are listed. There are many privately held companies that choose not to list their shares. Often, these companies are smaller, or they may simply prefer not to disclose all the financial and business information required for a listing.
Can a listed company be delisted?
Yes, a company can be delisted if it fails to meet the ongoing requirements of the stock exchange. This can happen if the company’s financial performance deteriorates, or if it is found to breach the rules of the exchange.
Is the stock of a listed company always available to buy?
Yes, as long as the company remains listed on the stock exchange, its shares will be available for public trading during the open market hours.
Does being listed guarantee a company’s success?
No, being listed does not guarantee a company’s success. While listing can provide a company with access to capital, the company’s performance still depends on various factors such as its business strategy, management efficiency, and market conditions.
Related Finance Terms
- Securities Exchange
- Initial Public Offering (IPO)
- Shares
- Equity Market
- Stock Exchange
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