What is the difference between public and private corporations?

The distinction between public and private corporations is primarily based on how they manage their ownership and their obligations to disclose information to stakeholders. Public corporations are those that sell shares to the general public through stock exchanges. This structure allows them to raise capital from a vast pool of investors, which typically results in greater access to funding and a larger scale of operations. Since their shares are publicly traded, public corporations must adhere to strict regulatory requirements, including the disclosure of financial and operational information to ensure transparency and protect investors.

On the other hand, private corporations do not offer their shares to the public. Instead, ownership is limited to a smaller group of investors, such as family members or private equity firms. This means that private companies have more flexibility in their operations, fewer regulatory requirements regarding disclosure, and are not subject to the same level of scrutiny as public companies.

The other options discuss aspects that do not accurately reflect the key characteristics distinguishing public and private corporations. Public corporations do require board meetings as part of their governance structure and have formal obligations to manage such meetings. Private corporations are not mandated by law to disclose earnings publicly, which is a significant factor that separates them from public corporations. Additionally, the suggestion that private corporations have unlimited liability for owners is misleading; typically,