No. of Recommendations: 2
The secondary market for shares sold in IPO exists primarily on the potential of the company to provide returns in the form of dividends or share price appreciation - both of which require expansion and money that came come from equity markets or debt markets both of which look at the prevailing share price created by the purchasers in the secondary market.

Agreed, but does having a smaller pool of prospective buyers actually negatively impact share price in the long run, after those who are divesting have sold out? How? That is the issue. I don't think it does. I think share price is determined in the long run by the company's financial performance, regardless of the size of the pool of prospective share-buyers.

I'm not against SRI--I've been doing it for 25 years, when I first began investing by buying shares in an SRI fund. I firmly believe that both I and the world are better off for it. But I think that's because it's impact is more along the lines of "sending a message" rather than doing any actual financial harm to the companies whose shares I won't buy.
Print the post  


What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.