Orderly share trading adds to confidence

SHOULD the boards of listed firms be at all concerned about volatility in the price of their companies' shares?

In theory, a listed company has no proprietary interest in the profits or losses arising from trades of its shares, so it can be argued that such volatility need not be an issue.

In practice, however, the market price of shares is often seen as a proxy of the intrinsic value of the company. Therefore, excessive and prolonged volatility may be perceived as a sign of the company's instability and can have a negative impact on its public profile.