I’m seeing a lot of companies that had tremendous growth over the past 3 years and at the first sign of “unmet targets” they take drastic measures (I.e. letting go of workforce). While their investors might indeed lose their confidence, sell their shares and, therefore, decrease the overall firm value, companies have made and still have lot of money in the bank, why do they need to care about growth, share price and what investors think to such extreme extents? Wouldn’t it be ok to just go with “we did not grow a single point this year and we have made the exact same profits of last year, that’s really good!”
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> Wouldn’t it be ok to just go with “we did not grow a single point this year and we have made the exact same profits of last year, that’s really good!”
If you invested your money in a company at the beginning of the year, and at the end of the year had the same amount of money, would consider that a good investment? Especially when there are zillions of other companies that would have provided an actual return?
A company is owned by it’s investors. It has a legal obligation to act in it’s investors best interests and the Board of directors can be sued in court if investors believe they are not doing so. The primary reason investors invest in a company is to get a return on their investment. If the company they invested in decided it wasn’t going to bother trying to grow the value of the company (and hence the investors investment) the investors would take their money to another company that can provide a return
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