Timeline for Would cross holding make market capitalization apparently more?
Current License: CC BY-SA 3.0
5 events
| when toggle format | what | by | license | comment | |
|---|---|---|---|---|---|
| Dec 9, 2015 at 16:50 | comment | added | user32479 | As for the public/private distinction, in the US at least there are scenarios where a private company will get regulatory scrutiny too. The one that comes to mind that I've heard of: Employee-owned companies are private, but if the employer wants to allow employees to hold their shares in a 401k plan, that brings requirements to have the share price externally validated. Definitely would hope in that case, that the external agent would detect this situation and raise a flag even on a private company. | |
| Dec 9, 2015 at 16:42 | vote | accept | user23013 | ||
| Dec 9, 2015 at 16:39 | comment | added | user32479 | As @Dheer pointed out, public companies are regulated. This is obscure enough, that I'm not clear if those rules would prevent this or not, and it might depend on which state's / country's rules apply. One might hope rules would either prevent it or require enough disclosure that it could be accurately priced by the market, in which case your assumption that A & B can keep issuing shares ad infinitum at the same price is bad. A private company has some latitude to set the share price in many cases. Your scenario here is a very complicated way for them to do an inconsistent or poor job of it. | |
| Dec 9, 2015 at 15:52 | comment | added | user23013 | For the first two points, I was aware that it doesn't generate money. I understand your last point as, there are no technical rules disallowing that, but the investors would be aware of this themselves and would not let it happen (at least not that many rounds). Is that the case? | |
| Dec 9, 2015 at 14:48 | history | answered | user32479 | CC BY-SA 3.0 |