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Issuing shares allows many individuals to participate in the financing of a corporation. Both small and large investors are able to participate because of the relatively small cost of a share, and the ease with which ownership can be transferred—shares are simply purchased or sold. Large amounts of capital can be raised by a corporation because the risks and rewards of ownership can be spread among many investors.
A corporation only receives money when shares are first issued. Once a share is issued, it can be bought and sold a number of times by various investors. These subsequent transactions between investors do not affect the corporation’s balance sheet.
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