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?
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?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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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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Step 1
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:
- The shareholder has the financial interest in the profitability of the company.
- 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.
- 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.
- 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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