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The Rise of the Rogue Executive: How Good Companies Go Bad and How to Stop the Destruction by Cynthia J. Smith, Leonard R. Sayles

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Chapter 3. The Stock Market and Executive Decision Making

Everyone (well, almost everyone) knows that the stock market is an essential element for a capitalist system. It is the essence of capitalism. One of the first reforms in countries moving away from socialism or state control of business is the introduction of a marketplace for the sale and purchase of shares in their newly privatized companies.

Stock markets facilitate raising money for growing a business, providing long-term capital. Selling stock is usually a better method of raising money, aside from meeting short-term needs, because there are no required interest payments and no dependency on money lenders. Those funds become part of the company’s permanent equity capital.

Investors buy ...

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