Why is it important for a corporation to maintain the confidence of the stockholder?

Retaining the confidence of the stockholders is important in the effect that the market value of the stock has on the corporation. Stock and the value of the corporate stock does not necessarily provide the corporation with income. It provides the corporation with capital. In turn, Capital becomes cash and collateral. The better the market value of the stock, because of high stockholder cofidence, the more a corporation is able to barter and trade in …

…I think that when shareholders lose confidence and stock prices drop then the ability to raise capital declines. Stock prices drop, the amount of money they can borrow decreases, interest rates increase. The general public tends to lose confidence in the company also. When the general public loses confidence in the product or the service a corporation is providing business slows down, revenue decreases, layoffs happen. The ability to stay in business becomes increasingly harder.