Shares that are publicly traded generally command higher prices than shares that are not publicly traded. Shareholders are able to diversify their investment portfolios, due to the increased marketability of their shares. Management in publicly held companies is generally compensated at a higher level than management of private companies. Management personnel upgrade their experience and employability by virtue of having served in responsible executive positions in a publicly held company. When a company goes public, management loses some of its freedom to act without board approval and approval of a majority of the shareholders in certain matters.
Shareholders tend to judge management in terms of profits, dividends and stock prices.
The cost of an initial public offering is substantial, in the form of underwriter's commissions and expenses, legal and accounting fees, printing costs, and registration fees. When a company becomes publicly held, the SEC requires it to reveal sensitive information on an ongoing basis, including business strategies, financial results, and executive salaries and compensation arrangements. The company is required to have its financial statements audited on a regular basis. As a public company, the company will have continuing costs for periodic reports and proxy statements that are filed with the regulatory agencies and distributed to the shareholders. A substantial portion of management time must be dedicated to initial and ongoing reporting requirements of regulatory agencies rather than to management of the company's operations.