Shareholder confidence is one of the most important factors that affect the stock price of a business. If after spending time and money to buy stock, investors feel that the company’s management (and therefore stock price) is not living up to their expectation, investors will then move away from the company to invest in another company. This is the reason why it is important to instill and maintain the confidence of the shareholders of a company.
Sound investment principles along with proper fraud protection are the best way to maintain investor confidence. Prior to any transaction, all potential clients, counter parties and entities should be thoroughly vetted and subject to in-depth due diligence and risk analysis. This sets forth a healthy and sustainable financial environment where the investors can easily invest and share in the profitability of the company.
AJ Discala, The Broadsmoore Group’s CEO believes that the only proper way to invest is in companies that have the interests of the shareholders before the short-term profits of the company. Companies that believe in doing thorough due diligence and research are the only ones worth investing in; one red flag is reason enough not to do a deal.
According to AJ Discala, every company needs to place an emphasis on the counter-party to avoid fraud in today’s fraud riddled environment.
AJ Discala advises potential investors to also consider factors such as management views on due diligence, risk analysis and counter party due diligence along with traditional PE ratio, debt equity and interest coverage to decide whether the stocks are appropriate investments. The best method to avoid losses is to put in a lot of research in a company’s practices before making any investment decisions.
