Question

Suppose you own 100 shares of IBM stock which you intend to sell today. Since you will sell it in the secondary market, IBM will receive no direct cash flows as a consequence of your sale. Why, then, should IBM's management care about the price you get for your shares?

Name: suppose you own 100 shares of ibm stock which you intend to sell today since you will sell it in the secondary market ibm will receive no direct cash flows as a consequence of your sale why 15875
Uploaded: 2023-01-14T18:14:01-08:00
Duration: 2 min 39 s
Channel: James Kiss
Description: suppose you own 100 shares of ibm stock which you intend to sell today since you will sell it in the secondary market ibm will receive no direct cash flows as a consequence of your sale why 15875

          Suppose you own 100 shares of IBM stock which you intend to sell today. Since you will sell it in the secondary market, IBM will receive no direct cash flows as a consequence of your sale. Why, then, should IBM's management care about the price you get for your shares?

Added by David O.

Horngren’s Cost Accounting

Srikant M. Datar, Madhav V. Rajan 16th Edition

Instant Answer

Solved by Expert James Kiss

01/14/2023

Step 1

IBM will receive cash flows as a consequence of your sale if you sell your shares to a direct buyer such as yourself. Show more…

Show all steps

Thanks for your feedback!

Suppose you own 100 shares of IBM stock which you intend to sell today. Since you will sell it in the secondary market, IBM will receive no direct cash flows as a consequence of your sale. Why, then, should IBM's management care about the price you get for your shares?