<P> Many stock exchanges require that publicly traded companies have their accounts regularly audited by outside auditors, and then publish the accounts to their shareholders . Besides the cost, this may make useful information available to competitors . Various other annual and quarterly reports are also required by law . In the United States, the Sarbanes--Oxley Act imposes additional requirements . The requirement for audited books is not imposed by the exchange known as OTC Pink . The shares may be maliciously held by outside shareholders and the original founders or owners may lose benefits and control . The principal - agent problem, or the agency problem is a key weakness of public companies . The separation of a company's ownership and control is especially prevalent in such countries as U.K and U.S. </P> <P> In the United States, the Securities and Exchange Commission requires that firms whose stock is traded publicly report their major shareholders each year . The reports identify all institutional shareholders (primarily, firms owning stock in other companies), all company officials who own shares in their firm, and any individual or institution owning more than 5% of the firm's stock . </P> <P> For many years, newly created companies were privately held but held initial public offering to become publicly traded company or to be acquired by another company if they became larger and more profitable or had promising prospects . More infrequently, some companies--such as investment banking firm Goldman Sachs and logistics services provider United Parcel Service (UPS)--chose to remain privately held for a long period of time after maturity into a profitable company . </P> <P> However, from 1997 to 2012, the number of corporations publicly traded on American stock exchanges dropped 44% . According to one observer (Gerald F. Davis), "public corporations have become less concentrated, less integrated, less interconnected at the top, shorter lived, less remunerative for average investors, and less prevalent since the turn of the 21st century". Davis argues that technological changes such as the decline in price and increasing power, quality and flexibility of computer Numerical control machines and newer digitally enabled tools such as 3D printing will lead to smaller and more local organization of production . </P>

The first time a corporation sells its stock to the public is known as an