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!”
In: 24
You’re making a non-existent distinction between the investors and the company. In reality the investors own and control the company and it only exists to enrich them. The investors can vote to remove board members, fire the CEO, institute layoffs or anything else legal that a majority agree to. Since the board of directors and CEO only serve at the pleasure of the investors they’re very reticent to piss them off by costing them money.
Latest Answers