CEO’s and business owners consider the stock price of a publicly traded company to be a signifier of what the companies health is like. Showcasing what the potential is to achieve profits in the future to investors, the higher the price of the stock, the more potential the company has to be successful in the long term.
When a business has a new CEO, the first thing that they might consider is the stock price. If the share price is low, it could result in a risk of a takeover by another company, make it difficult for the company to secure credit, build partnerships with other organisations and attract future investors – therefore, a CEO should take action to positively influence what the price of the shares is.
What does a CEO need to do to positively influence the share price of the company stock now it’s a publicly listed company?
There are many ways in which a CEO can positively influence the share price of a publicly listed company. An example of which is to make the decision to push advertisements of their company through social media and online. From this positive press, a company’s stock price is more likely to increase as a wider audience becomes familiar with what your company is offering.
A CEO could also hire share trading influencers, to help determine the best course of action with company shares.
If the CEO/business owner receives part of their compensation of the company through stock options (investment vehicles that can carry a high risk), it will be in their best interest to ensure that the stock price is steadily rising. They will do this by influencing a strong business strategy. To positively influence the share price, they will have to have a strong understanding of the global markets and also a solid financial acumen.
How important is it for the CEO and indeed the business owner to understand share trading and global markets?
It’s vital that both the CEO and the business owner understand what the global market is like within their industry and the importance of share trading. Share trading, for those that don’t know, is the selling and buying of company stock, that can result in an impressive profit.
If they are not aware of what the market is like, they will have to rely on their employees to make important business decisions for them. Similarly, if the business wants to trade shares, this will have to be done by those lower down the hierarchy in the business.
A CEO needs to know and have experience in dealing with such situations, as it is him/her who should make the final call of action.
Even though there should be a great focus on both the global market and share trading as they can shape vital business decisions, they shouldn’t be the only thing that a CEO focuses on. Too much attention on the market will result in them losing touch with day to day operations and missing other important decisions. It should, therefore, be something that’s in balance with the other aspects of their role. They should also have trust in the actions of their employees and collaborate with them in the final decision.
How can a CEO improve their financial acumen?
In order for a CEO to improve their financial acumen, they should ensure that they are fully trained on the basics of business finance, including forecasting, reporting, metrics, streamlining processes and the core financial literacy concepts.
Financial acumen is an essential characteristic that will determine how well a CEO will react in a time of financial crisis.
They can take part in training sessions with each of the department heads, getting them used to how the business works – an essential for a CEO that’s new. A CEO can then create a financial plan (with the help of the finance department), looking at what the current profits and investments are against the budget. This finance plan will predict and find ways in which to improve on the numbers by the next quarter.
By monitoring what the standards are and monitoring the resources and costs, it can result in a higher share price. A CEO should learn these key business quality skills through a method such as the one listed above, and continue to understand any trends that arise.
Without knowledge of the market or technology trends, the business will lose business to its competitors. Similarly, if a CEO lacks global skills, such as having no knowledge about the global markets or risk and compliance, the business will not be able to grow as well as resulting in the personal growth of the CEO suffering.