Re: [Pen-l] Purpose of stock market

[Doug Henwood <dhenwood@xxxxxxxxx>]

On Apr 27, 2009, at 11:38 AM, Bill Lear wrote:

> I was also interested in the question that I raised about how stock
> prices could affect prospects for getting loans for a company.  The
> basic argument I made to a co-worker is that stock markets are not
> very good for raising new capital --- at least they are not used very
> much for that purpose.  The counter-argument is "Au contraire, stock
> valuations are used to get financed".  And this, I believe, is very
> dubious.

Most companies aren't public, so they don't have a stock price. But  
there's no doubt that for public companies, the stock price does  
affect perceptions of the firm's creditworthiness. And the looks, from  
admiration to pity, the CEO gets when he steps onto the links.

Doug
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