Is The Power Switching From Directors To Shareholders?
The last few months have seen a large number of major companies come to the market cap in hand for financing to literally keep them in business. This has prompted many in the City to suggest that after the boom times it looks as though power has now passed from company directors to shareholders and the major institutional investors. Is this really the case?
While many people will argue that the power has always been in the hands of shareholders this has not always been strictly true, with many investors willing to reduce their demands in the boom times just to be part of a fund raising. However, in the current market we are seeing more and more directors coming under pressure and a great many of them paying the price of failure with their jobs.
As companies stretched their resources further and further for less return, chasing an ever evaporating share of the market, investors were sitting back and enjoying the boom time. However, as soon as the markets turned about face and profitability collapsed, those directors who were once their friends in business were soon under intense pressure.
In the real world, money and results are all that investors really listen to!
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