How can management deliver value for shareholders?
AbstractAlthough there is growing discussion about share value as a management goal, the ways to enhance value sometimes seem mysterious to executives. Indeed, the commentary surrounding the recent accounting scandals has questioned the validity of share value maximization as a business goal, but has yet to clarify the reforms that are really needed. Since 1980, though, a wealth of evidence has grown that reveal five proven ways to increase share value. One of them is pleasant for managers and employees, but it is very difficult to accomplish. The other proven paths to increased share value are easier to implement, but are unpleasant for managers. Value-based incentive systems often focus exclusively upon cash flows relative to resource investment; yet, share values are often based on much more than just the expected cash flows from already-existing operations. Indeed, the majority of share value in some firms may derive from the anticipation of growth opportunities (or other real options that enhance value by reducing risk or adding flexibility). So, the reforms needed in incentive systems should aim at motivating all of the proven paths to increase value for shareholders, and incorporate known methods for enhancing the value of real options.
Download InfoTo our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Bibliographic InfoArticle provided by Capco Institute in its journal Journal of Financial Transformation.
Volume (Year): 7 (2003)
Issue (Month): ()
Contact details of provider:
Postal: 120 Broadway, 29th Floor New York, NY 10271
Phone: +1 212 284 8600
Web page: http://www.capco.com/
Share value maximization; incentive systems; real options;
Find related papers by JEL classification:
- G12 - Financial Economics - - General Financial Markets - - - Asset Pricing
- G13 - Financial Economics - - General Financial Markets - - - Contingent Pricing; Futures Pricing
- G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
- G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statistics
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Peter Springett).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.