Effect of share prices on companies?

So a company's share price drops and the news headlines "millions knocked off xxx's value" - but what really is the effect of the share price change? OK the company might have had some bad news but the share price itself doesn't change the company's balance sheet or basic operation. So is it all about confidence and borrowing rates?
Similarly RMG isn't any more or less of an operation because the share price has gone up.
Just curious - thanks.
Reply to
AnthonyL
The directors are at risk of losing their six figure salary appointments, because they get replaced.
The company is at risk of being taken over:
- with the risk of the directors losing their jobs, because the resulting total number of directors is less; - the possibility that the buyer want to destroy a competitor, rather than expand their markets.
Customers may fear a hostile takeover and the resulting loss of future support for products from the company.
The company's ability to take over other companies is reduced.
Reply to
David Woolley

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