The necessity of stockholders cannot be overstated. Stockholders not only provide the company with capital, but they also steer the direction of the company by electing directors, voting on issues affecting the company, and providing a “thermometer” to gauge the company’s relative success. What I mean by that is that the purchase and sales of shares is a fairly good indicator of confidence in a company’s strength, strategy, financial health, and leadership. A good company that is strong strategically, financially sound, and possesses good leadership will attract investors to take an ownership stake, and the “thermometer” rises in temperature (price). On the other hand companies relatively weaker than its competitors strategically, financially, and poorly managed will not attract new stockholders, and will likely lose existing stockholders. The “thermometer” falls in temperature (price).
The pursuit of Truth continues armed with the ability to think, reason, and always ask "Why?". This site is dedicated to the Spanish Scholastics of the School of Salamanca who helped lay the foundation of free-market economics.
Tuesday, October 28, 2008
Are stockholders necessary in a company?
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