Why do companies care about their stock prices?
As people pointed out earlier, the stock price is the primary metric that the managers are judged on. Some people believe that the incentive for management to raise the stock price is so strong that managers have a perverse incentive to make decisions that boost stock price in the short term at the expense of strategically positioning the company for the long-term. Stock price also affects the ability of the company to borrow money at reasonable interest rates. I would guess that short-term stockholders are far more skittish, and can raise the uncertainty of future estimates of the stock price. Raising risk and holding reward constant will make a given investment less attractive. Fiduciary duty, like it was explained above, means that the managers of the company should act in the interests of the stockholders. Granting stock options makes the managers part-owners, and this is a way of bringing into alignment the interests of the management and owners (a good thing.) What the fiduciary
