How is the price of the firms stock determined and why is it important to the financial manager?

The stock price of a firm is valued in accordance with the demand and supply of shares in the market. If the future growth of the firm is good then the demand for the firm's stock increases and its price increases.On the other hand, if the future growth is bad and the economy is in a bad position then investors will be willing to go short, that is, selling their existing positions so that when we sell the share, the prices decrease and if the price decreases the supply increases.

The stock price of the firm is important for a financial manager as they have the responsibility to provide the useful information about the company's future growth. The investments that the company makes in future or any corporate governance issues which the company faces, the financial manager needs to check regarding that so as to work in the best interest of company's shareholders. As, stock price is decided on the basis of the factors mentioned above that are investments, corporate governance issues and so on, these need to be brought to the financial manager so that he can take necessary actions for the company's goodwill and let the shareholders know what action they have to take in accordance with buying and selling of the stocks.