Question about stocks
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Archived from the IMDb Discussion Forums — Economics, Business, Money, Finance
JWayc — 17 years ago(October 23, 2008 12:31 PM)
This is kind of a newbie question, but after a company sells all of its stock, and all of that is in the hands of external shareholders, why does the company care about the value of their stock? I understand that if their revenue is decreased,, their stock prices will fall, but is it the other way around? If stock prices fall, what directly influences the company based on the stock prices?
The Net is vast and infinite -
matjusm — 17 years ago(October 23, 2008 11:49 PM)
Directly it doesn't really affect the company at all. Its used if the company wants to raise some money so it issues new shares and sells them to the market or if the owners of the company want to make some money. The directors/executives of a public company want it to do well since their bosses are technically the owners or the shareholders so if they do badly, they get fired. And they're given extra incentives in the form of stock and stock options.
Or at least this is how I think it works.
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