If a company has already 'exited' with an IPO and sold its shares, what is the incentive to keep making money?

  • "Why would you want to earn more money, increase your value, keep your job etc etc" – William Dunne May 2 '16 at 12:09
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    The company is the shares. And typically you don't IPO a company and sell 100% of the shares, you use it to raise capital. For example if you wanted 250m to build a huge factory or something you may sell some shares so you can do so without taking on debt. – William Dunne May 2 '16 at 12:22
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    There might be people who leave the company and sell all their shares, but this question is based on a fundamental misunderstanding of company ownership vs. management. The CEO is being paid to keep making money, so his incentive is his pay package. The owners of the now publicly traded shares want some return, whether dividends or higher stock prices. Everyone has incentive. – NL - Apologize to Monica May 2 '16 at 13:49
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    The company hasn't "exited", the previous shareholders have... – assylias May 2 '16 at 14:24

A company doesn't offer up 100% of its shares to the market. There's a float amount of varying significance, maybe 30% of the shares are put up for public offer. Generally some amount of current shareholders will pledge some or all of their shares for offer to the public. This may be how the venture capital, private equity or other current investors cash out their initial investment. The company may issue new shares in order to raise money for some initiative. It may be a combination of existing shares and new.

Additionally, a company may hold some "treasury shares" on its balance sheet. In this instance fluctuations in the share price directly affect the health of the balance sheet.

As far as incentive goes, stock options to management and C-Suite employees keep everyone interested in an increasing stock price.

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Because people bought their shares under the premise that they would make more money and if the company completely lied about that they will be subject to several civil and criminal violations.

If people didn't believe the company was going to make more money, they would have valued their shares lower during the IPO by not forming much of a market at all.

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