Going public in an initial public offering (IPO) facilitates stockholder diversification,
increases liquidity of the firm’s stock, makes it easier for the firm to
raise capital, establishes a value for the firm, and makes it easier for a firm to
sell its products. However, reporting costs are high, operating data must be
disclosed, management self-dealings are harder to arrange, the price may sink
to a low level if the stock is not traded actively, and public ownership may
make it harder for management to maintain control.