Stock exchanges play an important and vital role in the economy
of the US. They encourage investment by providing a place for
people to buy and sell the securities issued by corporates that
are listed on US stock exchanges in a regulated and organized
manner. Because of the atmosphere of investment created by US
stock exchanges, directors of corporates can assess what the market
feeling would be to any new issue of securities their company
want to make. Moreover, it also allows investment banks to assess
the risk of being involved in any such securities issue.
So, although US corporates do not directly benefit from the activities
of US stock exchanges, they do benefit hugely from the atmosphere
of investment created by stock markets. This can be seen on the
one hand by the eagerly awaited securities issues that come along
every now and then, like the recent Google initial public offering,
and on the other hand by the less publicized corporate deciding
that now is not a good time to go ‘public’.
Either way, as regulated markets, US stock markets have historically
been shown to be the most ideal way for:
- corporates to assess market sentiment to any securities issue
- investment banks to ascertain the risks associated with any
such securities issue
- investor sentiments to trading in any given securities listed
on US stock exchanges
- mutual fund and pension managers’ investment sentiments
towards our long-term pension and personal investment strategies.
Thus, while US stock markets may not be the ideal structure,
they most certainly serve a purpose that no alternative has been
able to beat in over 300 years!
