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10 July, 20:01

Why would a decrease in a company's stock value make them nervous, even though the decrease might be small?

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  1. 10 July, 20:09
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    A decrease in a company stock value will make the company nervous even if the decrease is small due to these following scenarios.

    1) They don't have a stockpile of cash.

    2) It will become a problem for companies that relies on outside financing to fund their operations. Decrease in stock value will make their creditors wary in letting them borrow more money.

    3) Many stock companies use stock options as part of their employee benefits. If the value decreases, then employees will not be encouraged to stay on with the company.

    4) Continuous decrease in stock value will result to disgruntled stakeholders which may prompt dismissal of the CEO and his/her team and replacing them with more capable people ...
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