Listing on the Spanish
Stock Exchange
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STRUCTURE ORGANISATION AND OPERATION
OF THE SPANISH SECURITIES MARKET
A. Advantages and ways of
listing
The decision to list a company is the result of a
deep analysis. There are many diverse reasons why
companies are listed. In fact, when a company takes a
decision, there tends to be more than one reason, and
in any event, companies may benefit from all the advan-
tages offered.
One of the most noteworthy advantages that the
market provides listed companies is publicity and brand
awareness. A stock market listing provides a company
with publicity and raises awareness thereof, while also
boosting the impact and dissemination of its own pro-
motional activities, beginning with the floatation itself.
This is true for companies producing consumer goods
or services for the general public, where the stock mar-
ket helps to increase knowledge of the brand. Evidence
shows that share prices rise the more investors there are
who know the company is listed.
This increase in publicity also works for compa-
nies in expansion, which find easier to obtain excep-
tional loans from national and international financial
entities, etc.
A company’s image improves as a result of the
continuous publicity which the market provides and
which is reflected in the media. The stock market is
news every day.
The requirements applied to listed companies by
the Madrid Stock Exchange are also recognised in the
market as a guarantee of information and prestige.
A company’s listing means that it has achieved a
high degree of organisation and control. Investors value
each milestone in streamlining and professionalising the
management of a company which, in turn, acts as an
on-going incentive for the company to improve its com-
petitiveness.
On the other hand, companies have traditionally
sought financing on the stock market. Financing via
equity provides very positive flexibility and risk reduc-
tion, helping companies to attain the desired financial
equilibrium. Companies can benefit from subsequent
placements of shares as costs are reduced once the sha-
re is listed.
Another advantage is the access a listing gives to
an alternative source of financing to traditional bank
loans. This opportunity should be particularly interes-
ting for companies with large investments, both those
being currently carried out as well as those in the futu-
re. Listing on the stock exchange and making informa-
tion public to the whole investing community drives
up competition among those offering funds, putting the
company in a better position to negotiate. It is also pro-
ven that listing also improves the external perception of
the company´s solvency.
Another great advantage of listing is the liquidity
it provides for shareholders, freeing the company from
the moral obligation of seeking a counterparty for in-
vestors selling their shares and helping to resolve other
possible problems in family-run companies. It enables
owners to diversify their investment: directly, shifting
investment into other assets; or indirectly, using the ca-
pital obtained through a public offering to buy shares
in other companies.
The purchase and sale of shares among large groups
of investors prevents situations of predominance, which
in bilateral dealings could place the price far below its
target value. Moreover the trading of listed shares in an
organised market is less costly, particularly for small sha-
reholders who want to buy and sell shares quickly.
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