Which statement regarding investor-owned (for-profit) corporations is incorrect?

Investor-owned (for-profit) corporations operate with the primary goal of generating profit for their shareholders. A key aspect of their functioning involves the issuance and trading of stocks. When a shareholder sells stock, the corporation itself does not benefit directly from that transaction, as the sale occurs between two individuals in the secondary market. The corporation only benefits from the sale of stock when it initially issues shares to investors and receives the capital raised from that sale.

Corporate finance encompasses various mechanisms that allow companies to raise funds, and these include selling shares to investors. Once shares are sold, corporations can use the capital raised for expansion, development, or operational expenses. Shareholders, as owners of the corporation, do indeed play a role in influencing corporate decisions, particularly in major areas such as mergers, acquisitions, and strategic direction, often through their voting power at shareholder meetings.

Moreover, dividends are a way to share profits with shareholders. When a corporation generates profits, it may choose to distribute a portion of those profits as dividends to shareholders, recognizing their investment in the company. This distribution reflects the financial success of the corporation and rewards shareholders for their ownership stake.

In summary, the incorrect statement is that the company benefits when an individual sells stock, as the benefits from stock transactions occur