You are here

When a rising stock price can hide trouble in the company

A focus on stock price can mask a longer- term decline in a firm's financial footing

'Value myth': Bernard Ebbers of WorldCom. The case demonstrated clearly that a higher stock price does not always reflect real economic value. - PHOTO: BLOOMBERG

[NEW YORK] When a company receives criticism about its executive pay practices, a typical defence is to cite a rising stock price as justification of its pay. If total shareholder return is up, the theory goes, stockholders have no right to complain about what might otherwise look like outsize...

BT is now on Telegram!

For daily updates on weekdays and specially selected content for the weekend. Subscribe to