Issues in financial management Essay Example | Topics and Well Written Essays - 2000 words - 1

Issues in financial management - Essay ExampleSo firms make effort to keep their dowry hurt high, otherwise some other firm might be able to acquire a great number of their shares and be successful in a hostile coup (Metafilter) . A hostile takeover will result in the current management being dissolved by the company fetching over.Progressive companies are always looking for new projects and opportunities, and to pursue them capital is an essential ingredient. Companies want to fire the outlay of their stock for future issues of stock (Investopedia). So in future when companies raise capital by dint of stocks, they receive large amounts of premium moreover even when it borrows, firms charge less interest on conceivable debtors, so it also helps in raising funds cheaply.Companies are concerned about their market capitalization it refers to the size or worth of a business enterprise and can be calculated by multiplying the current market price with the number of shares outsta nding. If the worth of the company falls, investors will be less elicit in it and the company will lose its status (Henneman).Employee stock option/ownership is again a strong motivation for raising share price value for management. Employee stock options are a path of non-cash benefit that gives an employee the right to buy the companys share at a particular price at a future date (Balsam, Chen and Sankaraguruswamy). So management puts an effort to raise the share value above that value to take benefit of this option.Moreover the management raises the stock price to divert their stockholders and to maximize their value. The reason is that the shareholders elect the board of directors which elects the CEO. So the CEO has to enrapture the board which then wants to please shareholders to get re-elected.Share price re familiarises a number of aspects of a company. These aspects include company management, businesss current and future earnings and net assets, goodwill in the market, future outlook, credibility etc.The present