The issuing of shares of stock might help many small organizations to receive a high reputation for a short period of time, and make sure that they will have a stable development in the future. When businesses become public, they can make their initial public offering (IPO) and increase the general efficiency of the stock market (Colak et al., 2017). In some cases, the decrease or increase in public shares can influence the stock market in both positive and negative ways, but sometimes this sphere does not feel any significant changes, and the efficiency level stays the same.
For instance, during the pandemic, many businesses in the world experienced financial problems that did not allow them to take an active part in the stock market and issue shares. Many important areas of life like healthcare, real estate, and entertainment were not able to provide enough funding to maintain the previous level of the stock market (Mazur et al., 2021). The restrictions issues during COVID-19 limited people’s activities and interests, which they had before. Consequently, less money was integrated into the support of such public businesses as charities, cinemas, cafes, and many other areas which are not basic but bring a high level of happiness to people. The incomes of many organizations went down because of this global problem, and they were not able to make public funding to maintain the position of the stock market.
However, several organizations could mention that their income increased during the pandemic. These companies were mostly oriented on the internet planforms and delivery services at high demand during harsh lockdowns. Moreover, the percentage of funding from oil companies has always been high, and they had to create new strategies to maintain the stock market, which might be destroyed without their help. Companies, which are creating shares to increase the working flow of the stock market, usually make strategic plans for their development to make sure that businesses stand out in the competition (Adam et al., 2016). One of the solutions could be the start of integration into the African market as the affection of COVID-19 was not strong in the early stages (Ikechukwu & Omotayo, 2019). Consequently, the market stock level was saved and stayed relatively stable due to oil companies’ shares production, which did not see a huge decrease in their profit.
The efficiency of the stock market is presented differently in many countries. Every business should understand how an initial public offering should be made to make sure that it does not harm the inner system of the business and help with money flow in the market. Prediction of the future changes is also an important part of the decision-making when an organization wants to become public and issue shares as the modern environment does not have a stable trend. Following the latest trends in technologies might help create stability and a high level of efficiency in the stock market.
In conclusion, unpredicted life changes might influence the stock market in different ways, and when businesses are prepared for these quick changes, the outcomes will not be negative. On the example of the global pandemics, not all public businesses mentioned a decrease in profit and an inability to invest in the stock market. Some of them even managed to save the relatively high level of issues shares. Therefore, predictions of the future protect the stock market from the decrease in the efficiency level.
References
Adam, K., Marcet, A. and Nicolin, J. P. (2016). Stock market volatility and learning. The Journal of Finance, 71(1), 33-82.
Colak, G., Durnev, A. and Qian, Y. (2017). Political uncertainty and IPO activity: Evidence from U.S. gubernatorial elections.Journal of Financial and Quantitative Analysis, 52(6). 2523-2564.
Ikechukwu, K. and Omotayo, M. (2019). The impact of changes in oil price on stock market: Evidence from Africa. International Journal of Management, Economics and Social Sciences, 8(3), 169-194. doi:10.32327/IJMESS/8.3.2019.11.
Mazur, M., Dang, M. and Vega, M. (2021). COVID-19 and the march 2020 stock market crash. Evidence from S&P1500. Finance Research Letters, 38.