Management Responses to Current Stock Prices

The Business Review, Vol. 18, Number 1, September 2012, 47-54

Northeastern U. D’Amore-McKim School of Business Research Paper No. 2013-17

8 Pages Posted: 25 Nov 2012

See all articles by Donald Margotta

Donald Margotta

Northeastern University - D'Amore-McKim School of Business - Finance and Insurance Area

Date Written: January 2, 2012

Abstract

What should managers of corporations and of public policy do in response to current stock market prices and stock price changes? The answer to that question has important implications for corporate governance issues as well as for the intellectual foundation of public policy regarding merger and proxy regulations. It also requires an assessment of the normative value of certain precepts of finance theory. This paper reviews previous literature on this topic and provides evidence which suggests that while current stock prices and price changes indeed provide important signals for decision making by investors, their meaning for company managements, judges, and public policy makers may not be as compelling and depends on, among other factors, the nature of the company and of decisions being considered.

Keywords: Efficient market, agency theory, valuation

JEL Classification: D46

Suggested Citation

Margotta, Donald, Management Responses to Current Stock Prices (January 2, 2012). The Business Review, Vol. 18, Number 1, September 2012, 47-54, Northeastern U. D’Amore-McKim School of Business Research Paper No. 2013-17, Available at SSRN: https://ssrn.com/abstract=2180297

Donald Margotta (Contact Author)

Northeastern University - D'Amore-McKim School of Business - Finance and Insurance Area ( email )

Boston, MA 02115
United States
617-373-4739 (Phone)

HOME PAGE: http://web.cba.neu.edu/~dmargotta/

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