Ask HN: Why do companies care about their own valuation? As far as I understand company IPO allows to raise huge amount of money. Once they raised this money why do they care about share value on a daily basis? This valuation is different than cash flow and considering it too much deeply impact long-term strategy, no? |
You wouldn't want to give business to a company that has been losing value continually right?
That's one of negative things about stocks in general in my opinion, because people quite often have short-term (lasting a quarter or two) outlook.
That could be easily fixed by requiring all executive and board members' stock to be held for, say, 3 years after vesting before selling.
Or is it just a longer vesting period?
Shareholders are the CEO's boss.
in theory this factors in all aspects, e.g. more than just revenue, because it’s a comparison with other companies as well.
reality IMHO: it’s bullshit to manage short term valuation only.
As I understand it, if I leave the business before the vesting I get nothing. When the stock vests it becomes mine.
A lock down of the stock then means I can't trade it, but it remains mine (regardless of whether I stay or leave.) Once the lock is lifted I could sell it.
So in that sense there's a difference, yes.