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Surely public companies have no need to care that much? Once your shares are sold, they're out there, you don't care all that much if they decline in value. Th
by hugh3 15y ago
Surely public companies have no need to care that much? Once your shares are sold, they're out there, you don't care all that much if they decline in value.
The people for whom this is really bad news are the companies who were planning an IPO in the near-to-mid-term future.
- rdl 15y agoIf only. 1) "Fiduciary duty" in 2011 in the USA seems to mean maximizing share price at all times. If you don't, you're out of a job. 2) Compensation is largely tied to stock price -- either via options, or via bonuses paid explicitly on stock price. One thing you can do is bury your own specific bad news in a general downturn, since you'll be blamed a lot less for external things. E.g. if you have recalls, bad numbers, etc. to announce, announce them on a day when everyone is getting hammered for exogenous reasons. But yes, definitely worse for companies who have registered but not completed IPOs.
- blackguardx 15y agoPoint 3) is that it is nice to keep the stock price high if you need to do an additional offering down the road. This is probably the only real reason why a company should care about its stock price. Tying executive compensation to the stock price encourages the company to think on a quarterly basis. I don't think this is good in the long term.