The shareholder value in business industry is the most commonly used term in present age. The wildfire of equity culture is quickly spreading from United States to the whole world business industry and it has been grasped as critical today as it was in the last few decades. In United Kingdom the new systems of measurement for the creation of shareholder value were established in the last few years and these systems have been slowly but widely set up in number of firms.
In fact, in the United Kingdom some of the firms like Ironsides Lubricants and SCA have adopted shareholder value creation as their key business objective. While in other areas of Europe the idea of shareholders value creation had spread rapidly and more early. For instance in Germany, one of the market leading companies named as Veba – divisions closed to chief executive officer date back to the beginning of Veba, removed the managers for long-time, and made redundant hundreds of workers – all in the investors name. That chief executive officer was concerned about the value of shareholder. The chief executive officer said “Rewarding shareholders is the only approach to confirm that other people in the company are served also. It does not seem fine when all the jobs are in the under performing entities” (Eitemann at al, 2000).
[...] However, this tax reduction notion does not relate to few investors for instance pension funds that are not in tax category. Some businesses also exercise stock repurchase because it facilitates them to maximize leverage and shift towards a more attractive capital structure. The author then maintained that repurchase of share is a good notion if it is exercised at the right price (Rappaport, 1998) –Value Network for Shareholders Figure Shareholders Value Network, Rapport 1998. The above diagram symbolizes the association between the value drivers and corporate objective of shareholder value creation. [...]
[...] Or it can be possible that the interviewee intended to provide that they create value for shareholders but did consider it as key corporate objective. For such firms, it appears that they exercise neither of the two approaches: stakeholders or shareholder model. However, their position appears to lead to the model of stakeholders because many of them evaluated this approach by considering it key corporate objective. We realize that if the goal of the firm in relation to shareholders is extremely clear and clearly said the firm can obtain more advantage and this would of course have some impacts on value because the market would consider it that this firm is operating on its best capability, provided that it takes value creation for shareholders as key corporate objective Shareholder value creation in the long run Shareholder value creation in fro long term has a very critical position for shareholders. [...]
[...] In relation to economic value added, its reputation can be understood very easily. This method helps to check whether profits of firm return its capital cost or not; and it may be helpful for the estimation of business units. In 2000 Stern Stewart recommends performing approximately 164 adjustments. However, we consider that it can be fairly a process of labor-demand, and firms generally perform some of them or do not perform any (as one of the interviewees who use economic value added said). [...]
[...] The critiques of economic value added argued that EVA is the structure and system for the whole financial system and incentives reimburse system that can direct all decisions a company takes, from the top level to the lower level. EVA = NOPAT Where NOPAT stands For Net Operating Profit After Taxes, is Cost of capital percentage; and TC is Total Capital (see Appendix A 3.1 ) (Ehrbar, 1998). Ehbar (1998) argues that EVA framework offers the examination system by which the management looks their corporation”. [...]
[...] (1992). Research Method And Methodology In Finance and Accounting. San Diego: Academic Press Inc. Shaked, Israel, et.al. (1997). Creating value through EVA: myth or reality? Strategy Management. Competition, Fourth Quarter, Booz; Allen & Hamilton. Serven Lawrence. [...]
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