What is the difference between investing in a company as a shareholder vs as an employee? Are there factors that change how you see things when you are an employee vs when you are a shareholder?

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter20: Financing With Derivatives
Section: Chapter Questions
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What is the difference between investing in a company as a shareholder vs as an employee? Are there factors that change how you see things when you are an employee vs when you are a shareholder?

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Investing in a company as a shareholder means that the person in making an investment in the shares of the company and wants the maximization of his/her wealth in return.

Viewpoint while investing in a company as a shareholder:

  1. The shareholder has the financial interest in the profitability of the company.
  2. Shareholders want the company to carry out those activities which have a positive impact on the stock prices of the company and the dividend distributed by the company.
  3. They also focus on those activities which can expand the business of the company like mergers and acquisitions which ultimately leads to an increase in the profits of the company.
  4. Shareholders are free to sell their shares any time in the market and can buy a share of other companies which shows that they don't have long term needs with the company.
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