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Factors Affecting Company Share Price Essay

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Below is an essay on "Factors Affecting Company Share Price" from Anti Essays, your source for research papers, essays, and term paper examples.

Internal and External Factors Affecting a Company's Share Price


Internal and External Factors Affecting a Company's Share Price
The stock market is an irrational beast, motivated by greed and fear.   There are numerous factors internal and external that impacts the price per share.  

Internal Factors:
There are internal factors that for the most part, companies do have control.   The performance of a corporation is vital to the market price per share.   Investors look for profitability, The higher the company‚Äôs earnings and earnings per share the more attractive the stock will be to investors.   If a corporations issues dividends, it looks profitable to the potential investor.   If firm is profitable, they will be valued higher.   A higher valued company will have higher valued shares.   If the corporation issues share bonuses or warrants instead of cash payment, the value of the stock will decrease.   In this case the share price will go down yet the company value and profit increased.   Other internal factors include acquisition of companies, mergers, earnings reports, the suspension of dividends, new products or services, stock buyback, stock split, opening new markets, new contracts, expansion, cut backs, management changes, the hiring or firing of company executives and allegations of fraud or negligence. (Wolski, n.d.)

External Factors
The company has no control over external factors.   The basic economic concepts of supply and demand remain at the heart and center of stock markets. If there are more people wanting to buy shares of that company, this increase in demand drives the share prices up, since there is a limited amount or supply of the stock. Once demand for the shares drop, the number of available shares on the market rise, causing a downward pressure on the share price. ("Factors that Influence Share Prices in the Stock Market," 2009)
Investor confidence, how the investor perceives the company affects their buying trends.   Over speculations...

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