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Euro Stoxx 50: 1997-2005. Shareholder value creation in Europe

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Author Info

  • Fernandez, Pablo

    ()
    (IESE Business School)

  • Carabias, Jose M.

    (IESE Business School)

  • Aznarez, Julio

    (ESE, Business School)

  • Carbonell, Oscar E.

    (IPADE Business School)

Abstract

2005 was a very good year for the shareholders of the companies in the Euro Stoxx 50. The shareholder value creation of these 50 companies was €292.9 billion. The companies that created most value for their shareholders were Total (€30 billion), Sanofi-Synthelabo (€23.2 billion) and Eni (€20.7 billion). The companies that destroyed most value were telecoms: Deutsche Telekom (€-14.8 billion), France Telecom (€-11.8 billion) and Telecom Italia (€-7.1 billion). In 2005, the Euro Stoxx 50 was slightly more volatile than the S&P 500. Shareholder value creation in the three-year period 2003-2005 was €551 billion. The market value of the 50 companies included in the Euro Stoxx 50 was €2.1 trillion in 2005, although only €1.8 trillion were included in the index. SAP was the top shareholder value creator and Deutsche Telekom the top shareholder value destroyer during the eight-year period 1997-2005. A portfolio long in the companies that entered the index and short in the companies that abandoned the index had on average a 6.85% return in the 20 days prior to the index recomposition and a 0.97% return in the 20 days after the index recomposition.

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Bibliographic Info

Paper provided by IESE Business School in its series IESE Research Papers with number D/626.

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Length: 27 pages
Date of creation: 15 Apr 2006
Date of revision:
Handle: RePEc:ebg:iesewp:d-0626

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Keywords: shareholder value creation; created shareholder value; shareholder value added; shareholder return; required return to equity;

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