• Having shares traded on a stock exchange offers the company many benefits.stock market analysis screenshot image by .shock from Fotolia.com
  
  Stock exchanges are the most visible way to purchase and sell shares. Companies are often traded on at least one stock exchange, and many companies are traded on more than one exchange. Trading on a stock exchange offers a company many advantages.
  
  

Visibility

• The visibility that a stock exchange offers is beneficial to new companies. When a new company prepares to offer its first stock issue on a stock exchange, often investors have not heard of the company. Through the preparation of an information sheet called a green sheet, sales representatives that are involved in selling the new issue build investor interest, thus increasing the company's visibility even before they go to sell shares in the market. Once a new company has sold shares in the market, information about the company becomes public record and the fact that a company is traded on the exchange increases its visibility.
  
  

Liquidity

• If an investor cannot sell the stocks they have purchased at a reasonable price, they will not buy the stocks that a company issues. However, when a company issues stocks on a stock exchange, this allows people who want to buy the stock to connect with people who want to sell the stock and this provides liquidity to a particular stock. When investors see they are not locked into a particular investment, but can sell the investment if need be, due to high liquidity provided by the stock exchanges, they are more likely to purchase a company's stock.
  
  

Gain Investors

• Investing in a company presents a risk to an investor. When a company lists its stock on a stock exchange, which is regulated by the Securities and Exchange Commission, an investor is more likely to invest in the company. Investors like to invest in companies that are listed on stock exchanges because they know that the Securities and Exchange Commission regulates listed companies to ensure that investors are protected when they invest.
  
  

Method of Raising Capital

• Companies take a portion of their earnings and use the money to reinvest in the business to fund new projects. However, there are projects that require an extensive amount of capital and a company may not be able to raise this amount of money for several years. If the company wants to undertake a new project to respond to market trends, it cannot wait for several years when they have finally saved enough money. In this case, a company would sell shares on a stock exchange. When a company sells shares on the stock exchange, it is giving the investor a share in the company's profits through dividends as well as a share of ownership in exchange for money that the corporation can use to fund new projects.