[hnick]

Only in an IPO or other public issue really.

What happens is your money goes to whoever owned the shares and they use it somehow. That same money could theoretically be used to buy shares infinitely, except for fees, and the company would see none of it.

The effect on the company though is demand will drive the price up. Shareholders like higher prices so tend to reward CEOs who get them. This (hopefully) leads to an efficient company where they try their best so shares go up in value due to present or expected future performance which is good for the economy on the whole compared to having a bunch of inefficient companies.