AIS 1203: Researching a Company (Laborde)
Availability of Company Information
How much information you can find about a company depends on these factors:
Public Company (publicly-held, listed)
- Sells shares to general public to raise capital
- Regulated by the Securities and Exchange Commission (SEC)
- Required to disclose financial information to SEC and shareholders
- Listed on one of stock exchanges and has a ticker symbol
Private Company (privately-held, unlisted)
- May be owned by founders, employees , and large investors (venture capitalists)
- No disclosure of information is required
Company status may change over time due to sale, mergers, acquisitions, or going out of business. The easiest way to determine whether a U.S. company is public is to google a company name ticker, since a public company has to have a ticker symbol, and then confirm the current status using SEC's EDGAR tool. A public company has a recent 10K or 10Q.
Sources of Company Information
To better understand what kind of information may (or may not) be available, consider the sources. Who, why, when, and how produced the information should play a role in evaluating reliability and validity of sources. Multiple free and subscription resources are available:
- What the company tells you: company websites, promotional materials, catalogs, price lists, LinkedIn and other social media, and more
- What the company keeps confidential: internal information, trade secrets, and more
- What the company has to disclose to the government: 10Q, 10K, other SEC filings, economic census, state filings, conference earning calls
- What others say about the company: news, blogs, LinkedIn and other social media, research articles, books, market research, analyst reports, government, industry and trade experts, and more
A quick and critical evaluation of your sources is an important research skill. This easy-to-remember framework may help:
- What is the purpose of your research project? What is the expected output, for example, a presentation, report, analysis, research paper, etc.?
- Are you expected to use any specific sources?
- What sources may have relevant information?
- Is the information you are finding relevant to your topic and research goals?
- How deeply do you need to dig in? How much time do you have and what is the deadline?
- Are the sources credible?
- Are the methods of collecting data and analysis disclosed?
- Is the methodology sound?
- 'Who cares' enough to collect particular data or information? This question helps identify relevant sources.
- Is the author qualified to write on a topic?
- What are his/her credentials and qualifications?
- What are author's affiliations and how these affiliations influence their work and analysis?
- Do you need current or historical data?
- When was the information created/updated? Is it out of date?
- Have any major events happened since the information was published? What is the effect of those events?
- Why was the information created?
- Is there a discernible conflict of interest?
- It the topic presented from alternative viewpoints?
- Is the language neutral or emotionally "loaded"?
- Is it factual or opinion-based?
Multiple terms may be used to describe companies, each with a varying meaning and in different contexts.
Company: a business enterprise; an inclusive term for any type of business organization which can be a proprietorship, a partnership, or a corporation.
Closely-held company: a publicly-traded or private company where a small group of shareholders controls the majority of shares.
Enterprise: a company, firm, or other commercial entity, whether private or public, for profit or nonprofit. Often applied to a newly formed venture. The term is used by the U.S. Bureau of Census to designate entities consisting of many physical business locations, or establishments.
Establishment: a single physical location where business is conducted, or where services are performed. The term is used by the U.S. Bureau of Census for any business location that has one or more employees. Many businesses operate in multiple establishments. The establishment definition varies among industry groups because of differences in structure or standard practices.
Firm: A firm is a business organization, such as a corporation, limited liability company or partnership, that sells goods or services to make a profit. While most firms have just one location, a single firm can consist of one or more establishments, as long as they fall under the same ownership and, typically utilize the same Employer Identification Number (EIN). The title "firm" is typically associated with business organizations that practice law, but the term can be used for a wide variety or business operation units, such as accounting. "Firm" is often used interchangeably with "business" or "enterprise." (Source: Investopedia)
Franchise: an arrangement in which an independent business operates one or more establishments under license by the parent company, which may provide training, advertising, and financing.
Corporation: a legal entity created by state charter, endowed with specific powers and capable of surviving the deaths of its owners. May be profit and nonprofit (educational, scientific, charitable and religious). Stockholders and employees of a corporation cannot be held personally responsible for any debt or lawsuits faced by the company.
Partnership: an association of two or more people for the purpose of jointly owning a business.
Sole proprietorship: the simplest and most common form of business organization. The major legal requirement is that the founder register the business name with the local government where the company will reside.
Corporate Family Structure
(see more under under Corporate Family tab)
Parent Company: a company that controls or owns another company or companies.
Subsidiary: a corporation in which more than 50% of its voting stock is owned by another company. The subsidiary may have a different name than the controlling corporation.
Wholly owned subsidiary: 100 % of the firm's stock or assets have been acquired by the parent.