Question

what can happen if a firm is poorly managed and its stock price falls substantially below its maximum potential price?

Answer 1

Management:
Management of any venture is crucial for any ventures success. Having great people in teams and top management will increase the chances of success.

Good management can do good business with an average business idea.

Average management can do Average business with a good business idea.

If a business is poorly managed the even great business ideas fail.

1. Poor management can cause low corporate morale which leads to inefficiency of employees and decreasing profits. There is a high employees turnover ratio.
2. They can't even get proper business financing.
3. It leads to strain in day to day operations of the business leads to a drain of company funds.
4. Most important of all no best brain wants to join such a company. It leads to a lack of talent pool in the company.

A good Business runs on Idea+ Talent+ Passion+ Hardwork+ Smartwork + Profit.

Poor management can't make this equation possible.

Ultimate leads to fall in share prices, even below its intrinsic value.

They are many cases in history where good management of around of unprofitable businesses.

And poor management destroyed a well-established business.