I know stocks are traded to raise funds and help operate the business better, but can companies use the money to directly pay their employees? Or does all payroll come from revenue?
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A company gets nothing from their stock being traded by other people.
The only way a company gains anything is if they are the ones selling stocks. Either by issuing new (dilluting previous stocks) or sell previously owned ones (usually gained through stock buybacks, where companies buy their own stock instead giving away money for dividends).
A company will also benefit in general by having a high market value (high stock price) in regards to getting better terms on loans since the market value can be used as collateral if the company cannot pay back the loan.
Both of these options can be used to fund salaries for employees.
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