“CEO resignations often cause share prices to rise. Witness the effect of the latest CEO departure on Yahoo,” Dirk Schmidt writes for Asymco. “This typically happens because CEO replacements are not necessary when companies are successful.”
“In times of crisis, the market sees management change as a hopeful sign. But Apple is doing well,” Schmidt writes. “So it was commonly believed that if Steve Jobs were to leave the helm at Apple the stock would fall. However… the stock price has since risen.”\
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Schmidt writes, “Steve Jobs’ resignation as CEO, as sad as it may be, has reduced unsystematic risk from the stock and therefore “boosted” the share price performance.”
Read more in the full article here.
Less uncertainty = more optimism
Exactly what I was thinking. Investors just don’t like uncertainty.
This is so stupid…
The shareholders are relieved, because now that Steve has stepped down, they no longer have to worry about him stepping down?
Using that logic, they should have been looking forward to his departure, not fearing it!
Great Scott! It’s a paradox!
Yeah, it really makes no sense.
Actually it does make sense if you look at it in the perspective of the street.
Wall Street likes orderly transitions. So SJ being ill for so long and being able to leave the company by his own choice and show everyone that there was a transition plan in place makes everyone breathe easier and instills more confidence in the governance of the company.
As Elizabeth Taylor once said: “There is nothing more afrodisiac than success”
Solidarity
This makes perfect sense. He stepped down in a managed and controlled way and will continue to have influence while others take his place.
Investors were previously worried about Steve leaving NOT on his terms, such as dying. Now the worry about his health has essentially been taken off the table. This is why investors are relieved.
The stock price hardly moved since Jobs left to justify such sensationalist proclamations. There are so many factors influencing the stock prices, the biggest being macroeconomic situation, that the author’s conclusion is a logical leap
The stock market is an ass!