From my little understanding, company’s issues stocks to raise money. So once the company’s sell those stocks, why does it stock prices matter to them?
In: Economics
There’s more than one reason:
1. Managers are rewarded in shares or options
2. Shareholders will fire the managers if stock plummets
3. Companies occasionally want to raise new capital, *especially* when things aren’t going great (=stocks are down).
4. To use for mergers and acquisitions- they are commonly settled (partly) in stock.
5. To protect against hostility: if it’s easy/cheap to buy shares, these shares are cheap votes. It’s also cheaper to be prey of a take over
Latest Answers