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Aug 17, 2012

Does a company’s high stock market value mean added value to economy?

IN · · 1 comment
Industries and companies are the major components of any economy. The contribution from the industrial sector is high in many countries. In the countries like India, agriculture as the primary sector in the past but the rapid growth of industries, companies, corporate are contributing more to Indian economy.

The high stock market value of company is mean added value to economy. The high market capitalization will help the economy to get tax in many forms which could give a boost to the economy. The stock markets play a vital role in an economy, and it helps to read the economy through the fund flow into the system.

The high stock market value of companies will attract huge foreign funds into the system. The investment into the stock market helps the companies to utilize the fund in their production, which could be used in domestic market.

The growth in the production and productivity of the companies will help to attract more funds in the equity market. However, exposure to equity and investments could also lead to risk factor in some aspects.

When a company enters into the stock listing through IPO, it will have the minimum value for its stock price. Once the company gets good deals and declares its quarterly profit and loss report, based on that the share price may go up or down. That will show the market capitalization of the company. And in a span of time, the shares will grow fast so as the market capitalization.

High value of shares means the high market capitalization of the company the shares belong to. Highest market capitalization of companies will always help economy to get more and more investment. So, high stock market value can be considered as value added to economy.

1 comment:

  1. Industries and companies are more targeting organization in stock market.