Smaller-cap companies, like many of those in the health services, life sciences and medical technology sectors, experience more volatile stock price action than some of their mid- and large- cap peers. These small companies tend to lack the liquidity of larger firms and are therefore more vulnerable to news events (and often, big price movements will occur for no reason at all). For the executives and investor relations professionals of these companies, such price movements can be gut-wrenching.
In their quest for a solution to stock price volatility, some management teams monitor stock price movements on a daily basis and try to find explanations for this movement. This short-term focus is often non-productive and can even be distracting. It’s better for executives to concentrate on building long-term, sustainable shareholder value by providing the Street with identifiable milestones and successfully achieving those milestones.