Thursday 11 April 2019

Listed company executives' enemies

Elon Musk, an entrepreneur with a brilliant mind, is not having a good relationship with the SEC at the moment; moreover, he is not enjoying dealing with the shorters in the market. The share price of Telsa is not performing very well, because of the news and reports about car deliveries and demands and the fight with the SEC.
The duty of an executive of a listed company is to earn profits for its shareholders, which means pushing its share price higher and/or delivering a good dividend rate. However, the market will move in its own will, the price can skyrocket if the market hears stories which it likes and the price can dive if the market hears stories which it dislikes. Therefore, the executives want to deliver as much good news as possible but they have to release only true information to the market according to the law.
Of course, the executives have some strategic moves to draw the market's attention more onto the positive side news away from the negative side news. It may be able to fool analysts but it cannot fool a well designed algorithm. Many big players in the financial market are using algorithms to boost their profits; therefore, with a wider use of algorithms in the financial market, the executives will have to face more challenges to boost their companies' values and their shareholders' incomes, which means they will have tougher jobs to do.

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