Newbie questions on stock market.

Discussion in 'Stock Market' started by DustyInfinity, Jul 20, 2018.

  1. Mac1958

    Mac1958 Diamond Member

    Dec 8, 2011
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    Just another nut on a message board
    It's really not chaotic.

    Larger shareholders, whether they're on the board or not, have some influence. Yes, the Board of Directors does decide how much to pay to attract, keep and motivate a CEO. Ownership, via stocks, is always fluid, but typically the amount of stocks sold in a day or week or year are not enough to make a difference in the operation of the company. If China can buy enough shares, yes, they can gain controlling interest. But the chances of that, or of anyone else doing so, are very, very slim, and rare.

    So the things you're talking about are just tiny currents under the surface.

    The company was originally created by, usually, just a person with an idea. Apple Computer was created by Steve Jobs and Steve Wozniak in a garage. If they do well enough to take the company public, it's up to them to decide if they want to sell away their controlling interest in the company.

    The purpose for the existence of a corporation is to maximize shareholder value -- make it so that total return (the price of the stock plus any dividends it pays) continues to climb. That's it. So, the CEO has to keep the Board happy. The Board has to keep shareholders happy. Therefore, because he sold away equity in his company, Steve Jobs had to keep the Apple Board happy. It's this tension that creates the energy within a corporation to innovate and progress and expand.
    Last edited: Jul 26, 2018

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