Selling shares through a stock exchange is way companies get funded because a starter company eventually ends up needing more money to take the business to the next phase. As a company enlists to the stock exchange which requires, actually mandatory, to unfold everything to the public, such as earning statement, purpose of raising money, types of products or services, company's news, company's activities in terms of community help. Basically, one has a full access all these evaluating a company whether their products or services are unethical or not. This is how a company goes public by issuing IPOs certification, once it happens, no individual person owns the company, but only individual and institutional investors collectively by owning shares. Stock Exchange reserves "rights" for investors those who own shares and earn a piece of a company to judge a company with their moral standard and evaluate the worth of a company openly in the fair market place. It is a process of supply and demand of the stock of a company, opposite of fixed price system, which determines the price of a specific company openly by investors. Also, investors are welcome to express opinions of a company in a general meeting or maybe through an electronic media to hold managers accountable for any wrong doing.
Having all these transparence information of a company, an investor can decide which company has a great prospect of growth by analyzing past earnings per share, revenues growth, pioneer of a business, new innovative ideas, performance base management group, new business deal and many others. Other day-traders like to use daily trade volumes of a company, and its chart to speculate a share price which is completely based on individual preferences. There is no "hard role of fix price practice" in stock market system, all the information is given as transparent to all investors, and any decision is perceived on buying or selling stocks is individual preferences. All the goods and services provided by companies are absolutely essential and productive to our society for advancement. Yours every taka buying a share goes to producing either products or services-they are great part of leading the society advancement.
Stock exchange is a most vital role player for a country's economy and instrumental raising money directly from public which, of course, has a great purpose of assisting a company to expand businesses and grow its potential in a competitive free market system that will not only provide excellent services, innovative, durable products but also most competitive reasonable prices for the interest of the consumers, such a role in the growth of the industry or commerce of a country that eventually affects the economy of a country to a great extent. Economists consider Stock Market as an economic indicator of how well a country's economy is doing. In many studies show, the rise of value of stocks and value of corporate equities in a stock market enhances growing Country's GDP. However, economy and value of capital market are not purely correlated in a same growth rate but they are much more parallel in same direction. The studies also show based on collected data on 47 countries from 1976 to 1993 that banking and stock market size, volatility and integration with world capital market accelerate the current and future rates of economic growth, productivity growth and they are robustly correlated to GDP.
Recent economic crisis is a good example of how much stock markets around the world affected going downward slide which simply explains that economic expansion affects the stock market to go upward and while economic contraction, so called recession, causes the stock market to shrink. As a market going downward reduces wealth as well as stock market equities that cause further reducing GDP.
It is time to let go old ideas or beliefs and go beyond conventional wisdom for constructive thinking and finding opportunities in every aspect of investment. Stock market investment is much controllable and easy access in terms of buying or selling shares instantly with a little amount of money and less hassle than investment in real-estate, gold and fixed deposit in the Bank.Here is a chart shows how GDP and the value of corporate equities relationship (Source: Congressional Budget Office. http://www.cbo.gov/doc.cfm?index=4009&type=0 )