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Issued shares refers to all of the ownership shares of a company available for purchase. Shares are initially issued by companies in a process called an initial public offering. The company, working with accountants, lawyers, a board of directors and executives will determine how much stock to issue given their need to raise capital and the amount of shared ownership that meets the company's needs. Companies can then issue additional stock or buy back stock at various intervals as well.
The number of issued shares a company has is a large determining factor in what each share of stock is worth. A share of stock is an ownership stake in the company, or a percentage of a company that the investor owns. For example, if a company issues 100 shares of stock, then each person who buys a share owns 1/100th of the company. If the company issues 1,000 shares of stock, then each person who purchases a share owns 1/1000th of the company and each share of stock is thus worth resultingly less.
When shares are issued, the company sets a price for purchase, which is equal to the amount of money required by the company. Numerous disclosures are required for a company to issue shares and become a publicly held company, including information about the company's financial background and financial projections. The company then must report to the market as a whole and to shareholders at periodic intervals. All of the issued shares of stock are sold on the stock market or offered to select investors, and investors can buy and sell the shares according to the prevailing market values.
The value of a share of stock is determined by a number of different factors. If investors believe that the company is going to become more profitable, then the issued shares become more valuable. If the investors believe the company is going to be less profitable, as a result of management decisions or behavior or as a result of economic conditions in the market as a whole, then the shares of the stock become less valuable.
If a company needs to raise more money, it can generally issue more stock. These issued shares then dilute the value of the existing shares, causing a decline in stock prices. The Securities and Exchange Commission (SEC) in the United States sets rules for issuing new stock, as well as for the initial public offering of stock. The rules are designed to protect investors and ensure that a company does not artificially inflate the value of its stock offerings.
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