The dilution of control of a firm can be a disadvantage of an IPO.

Question

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When a company goes public through an IPO, it usually issues a large number of shares to raise capital. As a result, the ownership and control of the firm get diluted among a large number of shareholders, which can be a disadvantage for the existing shareholders who may lose their majority control over the company's decisions. This can lead to conflicts of interest and decision-making difficulties.

The Dilution of Control of a Firm Can Be a Disadvantage