what are the effects of a shareholder on a business?
- Thread Starter
- 03-10-2016 20:23
- 03-10-2016 20:41
A business becomes a plc/ltd so has limited liability and the goals of a business may change and become more focused on profits to give shareholders regular dividends and keep them investing in the business
- Very Important Poster
- 03-10-2016 20:51
Provide the capital at the beginning and are a source of continuing finance.
They can be passive and treat it as an investment or they can be active and exercise some of their powers as owners of the company.
That can be deciding who runs it on their behalf by approving or firing the board of directors.
Besides providing further finance by buying shares if thye dont like the shares they can sell them and if nobody else wants them, then it can make things more difficult for companies in terms of available finance. In contrast if shares are in demand and shareholders are willing to pay a high price, then a company can have access to more capital, enabling it to do more ambitious things.
Patient shareholders make it easier for the company whereas demanding ones can make it more difficult by demanding short term profits
Sure there are other things people can add.