"Reasons for going public"?

Reasons for listing

Why does a company want to go public? Of course, there are many reasons, such as greater visibility and the ability to raise funds for new businesses.

In fact, there is another rather peculiar reason. This is to make it easier for management to control the company.

Oh, why? Isn't it that the company becomes a public company after going public? More information needs to be disclosed, and regulations are stricter. How could it be easier for management to control?

The reason is simple: before going public, any shareholder could ask about the company's situation, and the management had to tell the truth out of both reason and obligation. At this time, shareholders were an important constraint on management.

However, once a company goes public, it becomes public, and shareholders lose their privileges. To know the company's information, they can only look at publicly disclosed materials. The management, which used to deal with shareholders who inquired privately and had to be taken seriously, now has to deal with fixed-format disclosure forms.

So, which scenario do you think makes it easier to hide real information? In which case do you think the management's ability to control the company is stronger?

So, what you are thinking may not be what you think～

In the long river of capital, going public is depicted as a magnificent ferry, attracting countless companies eager to showcase their most dazzling side to the market. However, this ferry does not allow one-way traffic; it conceals deep, secret undercurrents. It carries the hope of financing but also harbors the alternation of power. The reasons for going public are a multifaceted mirror, reflecting different truths from various angles, with the most bizarre aspect being the implicit reinforcement of power by the management.

The usual thought is that once a company goes public, it becomes a public enterprise, where there are no shadows under the sun, and all actions are transparent and visible. All information is presented in annual reports and announcements. Regulators can examine it with a microscope at any time, and market analysts can interpret a financial report as thrilling as a mystery novel. However, the truth is often much more complex than the surface. Going public is far from a simple transformation; it resembles a sophisticated game, a clever restructuring of power.

Imagine, before the company goes public, shareholders are like landlords in a manor, easily reaching the management. They have the privilege to ask questions directly and to understand the company's situation in detail. Under such direct supervision, even if management harbors a desire to conceal information, it is hard to maintain for long. This is a limitation of human nature: the pressure of face-to-face communication often makes the truth impossible to hide.

Once a company goes public, this constraint undergoes a subtle transformation. Shareholders become part of the public, their reach is curtailed by rules, and they can only understand the company through regularly disclosed materials. Although these materials appear clear in format and content, they often conceal the most critical information. This transformation essentially replaces direct scrutiny with observation through layers of glass. Faced with these 'fixed-format disclosure forms,' the pressure on management not only lightens but, to some extent, is completely alleviated.

This situation inevitably reminds one of a stage play. Actors stand under the spotlight, seemingly without concealment, but in reality, all the lines, actions, and expressions are carefully designed, and even the stage itself is set from specific angles, allowing the audience to see only what they want them to see. Aren't public companies similar? The disclosure materials are the stage, the management are the playwrights, and shareholders and regulators become the audience watching the stage.

The deeper mystery lies in the fact that a company after going public is no longer merely a private business entity but a public company in a legal sense. This 'publicity' makes the connections between shareholders more tenuous. The pressure originally applied as a whole is now dispersed among countless individuals. No one can single-handedly shake the entire company structure, while the management can use this dispersion to strengthen their power.

Perhaps someone will ask, isn't the presence of regulators a strong form of balance? Yes, and no. Regulators are like solemn referees who indeed set the rules and oversee their execution. However, this oversight is more about form than substance. Whether disclosures are compliant and formats are complete are certainly important issues, but the more significant content often hides between the lines or is never disclosed at all. This is a battle of words and an art of power.

The appearance of going public is transparency, while its essence is often a clever concealment. This contradiction is not born from malice but stems from the complexity of human nature. Management is not always conspiratorial; they may simply see the gaps in the rules and try to find space for survival and development within them. This space can sometimes be a reasonable strategy, but it may also be abused.

Therefore, we need to rethink the meaning of going public. It is not just a feast of capital but also a trial of power. It not only grants companies a broader stage but also tests the management's boundaries in exercising power. The reasons for going public are varied, but the most surprising is that in some cases, it allows the management to exert more control over the company.

The phrase 'what you think may not be what you think' is the best annotation of this complex phenomenon of going public. Shareholders believe they have gained more information, but in reality, they may have only entered a carefully crafted maze; the market thinks it has seen everything, yet the true motives may still be hidden in the interplay of light and shadow.

Ultimately, the root of all this lies in the fact that human nature always seeks a balance between transparency and concealment, and going public is merely a form that makes this balance appear more intricate. We cannot simply criticize, nor can we easily trust; we must remain vigilant, transcending the superficial brilliance to pursue a deeper truth. Perhaps true transparency will only arrive when the boundary between light and shadow is thoroughly blurred.

From then on, paper flowers become stories, calling upon history with no true transmission.

What you think may not be what you think.

～Mingdao