Question

How does the activity of investors in financial markets affect the decision of executives within the firm?

Answer 1

As such there is no direct relationship between the activities of investors in financial markets with the decision of executives within the firm in which investment is done or extracted by the investors.

But there exists in thing called Firm’s Stock market rate, which the Investors and the executives of the firm do watch simultaneously.

If the investors activities carries buying of stock which will raise the market price of the stock, that will motivate the executives of the invested firm to have challenging decisions towards raising the wealth of the Stockholders.

This decision of the executive would get defensive one if he/she observe that the investors are getting away from the firm’s stock and the market rate of the same is going down.

==============

Answer 2

How does the activity of inventors in financial markets affects the decisions of executives within the firm?

Answer 3

Is the agency problems is an ethical issues or an economic issue?