The Added Value Created By Companies Listed On Bucharest Stock Exchange: Trends And Perspectives

In light of their informational content, introduction to the financial theory and practice of financial indicators expressing the value creation has responded promptly to the economic environment’s necessities to combat the classical instruments’ deficiencies for measuring economic and financial performance based on profit, taking into account the risk associated with the business and the cost of capital invested by fund owners. The present study examines the added value created by companies listed on the Romanian capital market, through the evolution of five major indicators, namely economic value added, market value added, cash value added, cash flow return on investment and total shareholder return. The level of these indicators was determined for each year of the time frame 2009-2013 at the level of a sample composed of 36 companies listed on Bucharest Stock Exchange belonging to several sectors of activity of the most diverse. The selection process of the enterprises has considered the broadest possible representation of the directly productive sectors of the national economy, as well as fulfillment of minimum criteria relating to liquidity and the value of the shares included in free-float, to ensure that their market value is the most accurate one. Analyzing the evolution of indicators expressing value creation there could be ascertained the inability of companies listed on the capital market in Romania to significantly enhance their shareholders’ wealth during the five years analyzed, the presence of the financial crisis being felt to the full. The only indicator which recorded favourable values for a significant number of companies is the total shareholder return. This, however, is determined to a large extent by the favourable evolution of the average stock market return, especially in the first and in the last two years of analysis, the unfavourable evolution of market value added demonstrating, nevertheless, that the value increase attributed by the market is not enough to cover the amount of capital invested by fund holders.