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Why are corporations so concerned about their stock price?

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posted Jul 6 by Deepak Jangid

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1 Answer

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  1. A company might want to guard against hostile takeover, and a high stock prices makes such a takeover more difficult.

  2. A company has a pool of stock not yet issued, and high prices for current stock might bode well for future issues of stock (though the new stock would dilute the pool and bring the price down).

  3. Stock price is an indicator of goodwill toward the company, so higher stock prices might mean better rates for loans and other types of investment.

answer Jul 6 by Amrita
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