Editing Stock exchange (section)

===Corporate governance===
By having a wide and varied scope of owners, companies generally tend to improve management standards and [[Efficiency (economics)|efficiency]] to satisfy the demands of these shareholders and the more stringent rules for public corporations imposed by public stock exchanges and the government. This improvement can be attributed in some cases to the price mechanism exerted through shares of stock, wherein the price of the stock falls when management is considered poor (making the firm vulnerable to a takeover by new management) or rises when management is doing well (making the firm less vulnerable to a takeover). In addition, publicly listed shares are subject to greater transparency so that investors can make informed decisions about a purchase. Consequently, it is alleged that public companies (companies that are owned by shareholders who are members of the general public and trade shares on public exchanges) tend to have better management records than [[privately held company|privately held companies]] (those companies where shares are not publicly traded, often owned by the company founders, their families and heirs, or otherwise by a small group of investors).<ref>{{Cite book |last1=Courtney |first1=Thomas B. |title=The law of private companies |last2=Hutchinson |first2=G. Brian |date=2002 |publisher=Tottel |isbn=978-1-85475-265-9 |edition=2nd |location=Dublin}}</ref>

Despite this claim, some well-documented cases are known where it is alleged that there has been considerable slippage in [[corporate governance]] on the part of some public companies, particularly in the cases of [[accounting scandal]]s. The policies that led to the [[dot-com bubble]] in the late 1990s and the [[subprime mortgage crisis]] in 2007–08 are also examples of corporate mismanagement. The mismanagement of companies such as [[Pets.com]] (2000), [[Enron]] (2001), [[One.Tel]] (2001), [[Sunbeam Products]] (2001), [[Webvan]] (2001), [[Adelphia Communications Corporation]] (2002), [[MCI WorldCom]] (2002), [[Parmalat]] (2003), [[American International Group]] (2008), [[Bear Stearns]] (2008), [[Lehman Brothers]] (2008), [[General Motors Chapter 11 reorganization|General Motors]] (2009) and [[Satyam Computer Services]] (2009) all received plenty of media attention.

Many banks and companies worldwide utilize securities identification numbers ([[ISIN]]) to identify, uniquely, their stocks, bonds and other securities. Adding an ISIN code helps to distinctly identify securities and the ISIN system is used worldwide by funds, companies, and governments.

However, when poor financial, ethical or managerial records become public, [[stock investor]]s tend to lose money as the stock and the company tend to lose value. In the stock exchanges, shareholders of underperforming firms are often penalized by significant share price decline, and they tend as well to dismiss incompetent management teams.