Digital Research Initiative
University of North Carolina at Chapel Hill
Public Companies versus Private Companies
a business firm is "private," the ownership of the firm is limited
to a close circle of individuals and the public cannot buy any part of the
a business firm is "public," the ownership of the firm is open to the public,
and anyone who can afford to do so may buy part ownership of the firm. This
part ownership is called "stock." People who own stock in a firm are "stockholders."
Organization of Business
- By charter:
When a firm "incorporates," it creates a charter, which is a document that
details the company's functions, capitalization, and directors. The charter
of a business firm is much like one of a city, both serve as founding documents.
through an elected body: In a publicly held firm, stockholders elect the Board
of Directors. (The more stock one person owns in the company, the more his
or her vote counts.) The Board of Directors appoints administrators and executives
for the firm and decides which direction the firm should move in. If people
do not like the decisions made by the Board of Directors, they may try to
purchase enough stock to give them the authority to vote out the current Board
organization is usually created to serve an important public need. Two examples
of non-profit organizations are Rape Crisis centers and Famine Relief funds. Because
such organizations are exempted from taxes, the government and the public keep
a careful watch on their activities. These corporations must fill out the Internal
Revenue Service's Form 990, which lists their revenues and expenditures. This
document is available for public scrutiny.
Where to find information
Business directories lists firms and their addresses, phone numbers, officers,
goals and divisions. Some directories are Standard & Poor's Register of
Corporations, Directors and Organizations, and Ward's Business Directory of
US Public and Private Companies.
Documents: In every state in the US, the secretary of state's office
has a division to which every corporation doing business in that state must
report to. The corporation's charter as well as other important information
is available on the state level.
The Public Relations (PR) division of a corporation can provide you with
annual reports, the corporation's charter, SEC registration statements, and
many other things. The PR portion of a firm can often be found in its listing
in a Business Directory.
source of information about publicly-held firms is the Securities
Exchange Commission, which was founded in 1934 to ensure "the fullest possible
disclosure to the investing public." It is located in Washington, DC and has
nine regional locations. SEC documents are also available at government depository
libraries and libraries that subscribe to Q-Data or Disclosure services, which
provide microfiche or electronic copies of SEC information. To find out which
companies are required to report to the SEC, you can refer to the Directory
of Companies Required to File Annual Reports with the Securities Exchange Commission,
which is available at many library reference departments and government depositories.
a list of the types of documents publicly-held firms must file with the SEC:
Application or Statement: This is the first document companies must file
when they want to begin to sell stock to the public. This document usually
contains director and financial information.
10K: This is a company's annual report to the SEC, and it contains a wealth
of information about the firm. The 10K includes a complete financial statement,
a summary of all operations that year, a list of the most prominent stockholders
and shares they own, salaries and benefits of the directors and major officers,
the results or current situations of any legal proceedings the firm is involved
in, and forecasts about any changes in future operations.
10Q: This is a company's quarterly report to the SEC. The 10Q is a less
formal, less extensive update to the 10K. It updates any financial and legal
issues that the company is facing, as well as report on any voting done by
the stockholders since the last report.
8K: This report must be filed with the SEC within 15 days of a significant
change in the company's operations, such as changes in ownership, pending
bankruptcy, or lawsuits.
14D1 and the 13D: These forms are takeover alerts. When an offer to purchase
a firm is made, a 14D1 must be filed, and when an individual tries to buy
more than 5 percent of a company's stock, a 13D must be filed. These forms
can contain information about the potential purchasers, the financing of the
purchase, and the proposed price of the purchase.
6K: This is the report that foreign firms which sell stock in the US
must file with the SEC. It is much like the 10K.
prospectus: This is a report which companies must file when they want
to begin to sell new securities on the market. This firm could be becoming
publicly-held for the first time or have been publicly-held for a while. The
prospectus will contain information that will help investors decide the value
of the new opportunity.
proxy: This is a document which allows a director to vote for an individual
stockholder or group of stockholders at the company's annual meeting.
Other Government Agencies
that Deal With Business Firms
Federal Trade Commission (FTC): formed in 1914 to be a business watchdog,
the FTC has the goals of promoting fair competition, preventing false advertising,
preventing deceptive business practices, regulating certain forms of packaging
and labeling, and protecting consumers from circulation of obsolete and
inaccurate credit reports. FTC activity can be researched through the Federal
Register Index, the federal Monthly Catalog, through databases like LegalTrac
and ABI-Inform, and through business periodicals
Occupational Safety and Health Administration
(OSHA): This agency focuses on worker health and safety and workplace
conditions. OSHA's records are available on both the federal and state level.
Internal Revenue Service (IRS): The most important function the IRS
can do for journalists is to help provide information on non-profit organizations.
The non-profit tax form is the 990, which will reveal all revenue sources
of the organization, employee wages and benefits, and total expenditures.
of Labor: This agency is involved with unions, management, collective
bargaining, mediation, and pension plans. Inside this agency is the Bureau
of Labor Statistics, which provides a lot of data on employment, prices, productivity,
and other issues.
Food and Drug Administration (FDA): This
agency is charged with the responsibility of preventing dangerous food and
drug products from entering the market. It is often in the middle of a controversy,
and the FDA's records can be found in the Federal Register Index and
the federal Monthly Catalog.
Protection Agency (EPA): The EPA is responsible for regulating the
toxic discharges companies release into our environment. It maintains
a "Toxic Chemical Release Inventory" for each firm that has released toxins
into the environment.
Employment Opportunity Commission (EEOC): This commission investigates
hiring and pay discrimination, and publishes data regularly on the employment
status of women and minorities.
Other Ways to Find Information
Information Sources (2nd ed.): This is a vast collection of reference
works, directories and associations that will be quite helpful in your search.
of Business Information Sources: This book, which is issued every two
years, lists more than 1,000 information sources about corporations and
Encyclopedia of Associations: This extremely helpful volume contains
listings and information on over 20,000 associations as well as their regular
National Trade and Professional Associations of the United States: Similar
to the Encyclopedia of Associations, this book also lists union and
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