) Listing is the rules, according to which
securities are allowed before quotation on any stock exchange, thereby becoming
the subject of exchange transactions. Joint-stock companies are trying to get
on the list of quotations, since inclusion in the listing gives them certain
big volume of information and an increase in the prestige of the firm among
investors, since, in addition to its own evaluation of the quality of shares by
the investor, an assessment of these qualities is carried out and the stock
best conditions for obtaining loans, since lenders can compare the book value
of a company’s assets with an exchange valuation;
visibility of the market; shareholders and potential investors can easily
follow transactions and quotes, as the financial press provides a detailed
report on stock trading in stocks, while the over-the-counter market is much
Listing can allow speculators to raise or lower prices at their discretion.
Strong fluctuations in stock prices affect real investors.
In case of excessive speculation, the price of shares may not reflect its
In the case of bear markets, stock prices may be reduced, and the company’s
position may be reduced in the eyes of investors, shareholders, bankers,
creditors, employees, etc.
Listing of securities may induce the management and the top level employees to
indulge in ‘insider trading’by getting access to important information. Such
actions adversely affect the common security holders.
The management might enter into an agreement with brokers to artificially
increase prices before a fresh issue and benefit from that. Common public might
be induced to buy shares in such companies, ultimately the prices would crash
and the common investors would be left with worthless stock of securities.
Listing requires disclosing important sensitive information to stock exchanges
such as plans for expansion, diversification, selling of certain businesses,
acquisition of certain brands or companies etc. Such information might be used
by the competitors to gain advantage.
Outsiders might acquire substantial shares in the company and threaten to take
over the company or they might demand hefty compensation to sell their shares.
Stock exchanges in India still suffer from shortcomings. Listed securities
might be utilized by scamsters to indulge in scams.