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What should a company’s objective be? Simply to maximize returns for shareholders by increasing the intrinsic value of a business, or should the company acknowledge the interests of other stakeholders – employees, customers, society – in its decision making?
Taking into account events of the past five years – including the excesses of the dot.com boom, renewed market pressure to deliver short term earnings, and scandals arising from executive greed – the authors revisit the case for maximising shareholder value and find it rock solid. Their argument is simple: the more shareholder value companies create, the better they serve other stakeholders too - by creating more employment, making more tax payments, and providing incomes in retirement to the ordinary individuals who are the majority of ultimate investors.
This latest edition of Valuation helps executives understand how to measure the value in their companies and make the kind of strategic decisions that will ensure they create shareholder value. Importantly, this latest edition highlights the need to focus not only the short-term performance of a company but also its long-term health – that is, its ability to create shareholder value year after year.
Good corporate health rests on a number of factors, including a robust strategy, well-maintained assets, and a good reputation with customers, regulators, governments, employees and other stakeholders. It doesn’t necessarily rely on high-growth plans. Indeed, many companies have destroyed value through their growth ambitions, particularly when they overpaid for assets.
With more than 350,000 copies sold, Valuation has become an essential tool for executives and finance practitioners around the world, and has been translated into nine languages including: French, German, Italian, Portuguese, Spanish, Dutch, Chinese, Japanese, and Korean. This edition has been completely updated and adds new chapters on subjects such as:
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Emerging Markets and the challenge of valuing businesses in such markets
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Behavioral Economics and whether investors really can influence a market’s course through irrational decision making
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Measuring Corporate Performance and the need to consider long-term corporate health on par with short-term financial results
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Capital Structure and how decisions about debt levels, dividends and share repurchases can support corporate strategy
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Investor Communications and the need to ground them in analysis of a company’s value, its strategy and its current and potential investor base |
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