Shareholder Value Creation: A Review of the Theoretical and Empirical Literature

2018 ◽  
Vol 14 (3-4) ◽  
pp. 74-80
Author(s):  
Merugu Venugopal ◽  
Ravindar Reddy M. ◽  
Bhanu Prakash Sharma G.
Keyword(s):  
Empirical Evidence ◽  
Performance Measures ◽  
Value Creation ◽  
Shareholder Value ◽  
Business Environment ◽  
Empirical Literature ◽  
Traditional Performance ◽  
Insight Into ◽  
Important Objective

The article attempts to study in detail the significance of shareholder value creation in the companies in emerging markets and reviews the research articles and studies available in categories such as importance, empirical evidence and drivers of shareholder value creation. The purpose of this article is to give an insight into shareholder value in the first section followed by the empirical evidence and drivers of the shareholder value. For this purpose of review, the article considers various studies made on shareholder value creation published by various recognised and other recognised sources. It is observed that shareholder value creation is the most important objective in this competitive business environment to maintain the long-term relationship with the investors. The empirical evidence attempts to prove that value-based measures outperform the traditional accounting measures. The article tries to investigate the need for finding the superior measure among the shareholder value performance measures and recommends the need for reviewing the traditional performance methods.

scholarly journals Does mandatory CSR provide long-term benefits to shareholders?

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Juniarti Juniarti
Keyword(s):  
Developing Countries ◽  
Empirical Evidence ◽  
Stock Exchange ◽  
Shareholder Value ◽  
Content Type ◽  
Accounting Measurement ◽  
Annual Reporting ◽  
Shareholder Benefit ◽  
Term Benefit

Purpose Mandatory corporate social responsibility (CSR) aims to protect the long-term benefit of shareholders; therefore, this study aims to seek empirical evidence for the benefit of mandatory CSR from the perspective of shareholders. Design/methodology/approach Consistent with the objective of this study, the long-term shareholder benefit is measured using the sustainability perspective. Companies listed on the Indonesia Stock Exchange that have at least five years of CSR implementation, as its mandate and have retroactive earnings data for minimum six years before the observation year are selected as the study’s sample. Findings The findings support that mandated CSR protects long-term shareholder value; there is a significant association between CSR and sustainable shareholder value. Industry profiles are an essential aspect of the association model. The results are robust through testing the association for various scenarios of time. Research limitations/implications This study uses a single measurement of shareholder value based only on accounting measurement. Further, due to limitations in accessing internal company data, this study relies on annual reporting information to measure CSR implementation. Originality/value This study is the first to provide empirical evidence of the long-term benefit of mandatory CSR from the shareholders' perspective. This study also contributes to the existing literature by evaluating the success of mandatory CSR in developing countries. Those that successfully implemented mandatory CSR can serve as a model for other developing countries interested in creating similar policies to encourage socially responsible companies.

scholarly journals Innovation Strategies, First Mover Advantage and Performance in the Context of the Microfinance Sector: A Review of Literature

2018 ◽  
Vol 13 (7) ◽  
pp. 195
Author(s):  
Paul Ouma ◽  
James M. Kilika
Keyword(s):  
Empirical Work ◽  
Business Environment ◽  
Empirical Literature ◽  
Future Research ◽  
Strategic Option ◽  
First Mover Advantage ◽  
Innovation Strategies ◽  
And Performance ◽  
First Mover

The prevailing business environment is erratic and unreliable. The accomplishment of trade in such environment is determined by an organization’s capability to adjust and respond to environmental variation. Innovation strategies offer a strategic option that can be used to align organization’s assets and competencies with prospects in the external environment in order to heighten survival and long term success of an enterprise. Execution of such a strategic option is likely to result in strategic moves that will register impacts in the market which requires decision makers to consider the timing of their moves that operationalize the strategy in the market. The extant literature has pursued discussions on the construct of innovation strategy separately from that of first mover in spite of the implied indications that the two can be integrated into a strategic management phenomenon that will influence the firm’s performance. This study provides a review of existing theoretical and empirical literature on the perspectives connected to innovation strategies as a strategic option, first mover advantage in the phenomenon leading to performance in the context of microfinance setting. The applicable theories are reviewed, concepts and their operational indicators identified and matched against existing empirical work and nascent knowledge gaps identified. The study finally, suggests a theoretical framework appropriate for progressing knowledge in the field of study together with the associated inferences for future research.

scholarly journals ESG Importance for Long-Term Shareholder Value Creation: Literature vs. Practice

2021 ◽  
Vol 7 (2) ◽  
pp. 127
Author(s):  
Ilze Zumente ◽  
Jūlija Bistrova
Keyword(s):  
Content Analysis ◽  
Performance Management ◽  
Value Creation ◽  
Qualitative Content Analysis ◽  
Shareholder Value ◽  
Mission Statements ◽  
Eastern European ◽  
Management Quality ◽  
Nonfinancial Factors

This article aims to detect how ESG adds value to the long-term shareholder value creation and to discover whether businesses are aware of positive ESG effects and, therefore, whether they will become more ESG-conscious. By conducting a qualitative content analysis on the academic literature, this article firstly aims to determine if shareholders’ value is positively affected by corporate ESG awareness. Secondly, to test whether companies are becoming more conscious about the importance of ESG, the mission statements of publicly listed Central and Eastern European (CEE) companies are compared to their decade-old versions. This analysis allows us to conclude on whether companies have shifted their attention to the ESG factors as a part of their purpose of existence and, therefore, for long-term shareholder value creation, which is one of the main goals of the exchange-listed enterprises. The content analysis results show that companies with higher sustainability awareness ensure shareholder value creation via improved financial performance, management quality as well as reduced risk metrics. Additionally, qualitative nonfinancial factors such as reputation, stakeholder trust, employee satisfaction and engagement provide an even more significant effect on the long-term value than the pure financial matters. The theoretical trend is found to be supported by the fact that sustainability practice and consumer-oriented keywords dominate the mission statements of CEE companies, while keywords related to shareholders and profit experienced the most significant decrease from 2012 to 2021. The present research is unique as it looks at how companies tend to become more ESG aware, integrating the sustainability perspective into their mission statements in response to the global sustainability trend.

scholarly journals Financial Performance Measures And Shareholder Value Creation: An Empirical Study For Chilean Companies

2011 ◽  
Vol 17 (3) ◽  
Author(s):  
Eduardo Sandoval
Keyword(s):  
Performance Measures ◽  
Value Creation ◽  
Pension Fund ◽  
Shareholder Value ◽  
Explanatory Power ◽  
Cash Flows ◽  
Net Income ◽  
Operating Cash Flows ◽  
Alternative Measures ◽  
Financial Performance Measures

<span style="font-family: Times New Roman; font-size: small;"><p class="MsoNormal" style="margin: 0in 0in 0pt;">This paper focuses on the most important Chilean companies and studies whether EVA<sup>TM</sup> dominates REVA and competing accounting measure in explaining shareholder value creation.<span style="mso-spacerun: yes;">&nbsp; </span>Our results indicate that REVA outperforms alternative measures in associations among their current and lagged realizations and value creation.<span style="mso-spacerun: yes;">&nbsp; </span>However, at the industry level, REVA explains value creation only for construction and investment industries.<span style="mso-spacerun: yes;">&nbsp; </span>For the remaining industries, in addition to the high explanatory power associated to REVA, the net income and operating cash flows help to explain only a low portion.<span style="mso-spacerun: yes;">&nbsp; </span>We conclude that accounting measures should be only considered as marginal complementary performance measures used to compensate executives mainly from the electric, beverage, metallurgic and pension fund industries.</p></span>

scholarly journals Toward Improved Use Of Value Creation Measures In Financial Decision-Making

2013 ◽  
Vol 29 (4) ◽  
pp. 1175 ◽  
Author(s):  
John H. Hall
Keyword(s):  
Decision Making ◽  
Information Content ◽  
Performance Measures ◽  
Value Creation ◽  
Shareholder Value ◽  
Decision Makers ◽  
Value Drivers ◽  
Financial Decision Making ◽  
Specific Indication ◽  
Financial Decision

In the last two decades,numerous studies have been conducted to find sources and explanations for valuecreation and the value drivers of share returns or shareholder value creationby firms. This study aimed to determinewhether more refined firm categorization and an increase in the number of variablesanalyzed would yield more robust information on value creation measures thatfinancial decision-makers can use. Fourdifferent categories of firms were compiled.For each category, 11 different internal performance measures wereregressed against two different external shareholder value creation measures. The empirical results show that differentvalue creation measures explain shareholder value creation best for differentcategories of firms. Economic-basedindicators provide higher information content than accounting-based indicatorsfor financial decision-making. Theinformation content of internal value drivers varied when different externalshareholder value indicators were used. Thisstudy provides financial decision-makers with a more specific indication of theuse of shareholder value creation measures for specific firm types.

scholarly journals Does EVA beat earnings? A literature review of the evidence since Biddle et al. (1997)

2015 ◽  
Vol 12 (3) ◽  
pp. 8-18 ◽  
Author(s):  
Jon Svennesen Toft ◽  
Rainer Lueg
Keyword(s):  
Performance Measures ◽  
Value Creation ◽  
Shareholder Value ◽  
Performance Measure ◽  
Management Control ◽  
Residual Income ◽  
New Findings ◽  
Consulting Firms ◽  
Accounting Numbers ◽  
New Evidence

Biddle et al. (1997) demonstrated that sophisticated residual income-based figures are not as superior to traditional accounting-based performance measures in tracking shareholder value as consulting firms have claimed. During these 17 years, the intensive discussion of which type of measure tracks shareholder value creation the best continued, both from a theoretical and a practical perspective. This article compares the new findings from advanced research between 1997 and 2014 to assess the ongoing validity of Biddle et al.’s (1997) conclusions. We separate articles into two groups: the ones that find accounting-based performance measure to perform best, and the ones who speak in favor of residual income-based performance measures. In order to do this, we have scanned 618 articles that relate to the findings of Biddle et al. (1997) and analyze the 21 articles that actually contributed new evidence. We find that the conceptual discussion still favors management control systems based on the more sophisticated residual income-based measures. Yet empirically, the vast majority of new studies with advanced research designs still find that accounting numbers are by no means inferior in measuring shareholder value creation.

scholarly journals Keeping the Competitive Edge of a Convention and Exhibition Center in MICE Environment: Identification of Event Attributes for Long-Run Success

2021 ◽  
Vol 13 (9) ◽  
pp. 5030
Author(s):  
Jaeyoung An ◽  
Hany Kim ◽  
Dongkeun Hur
Keyword(s):  
Business Environment ◽  
Valuable Insight ◽  
Operational Strategies ◽  
Competitive Edge ◽  
Long Run ◽  
Environment Identification ◽  
And Performance ◽  
Mice Industry ◽  
Insight Into

Understanding the weaknesses and strengths of event attributes plays a significant role in business survivability, specifically the meetings, incentives, conventions, and exhibitions (MICE) industry, in which the business environment is competitive. To be in business and survive long-term, service and product offerings must satisfy the needs of clients. In the case of the MICE industry, clients include event organizers, planners, and attendees. Thus, the IPA (importance-performance analysis) was conducted with hopes to provide valuable insight into the MICE industry to identify and evaluate their offering (attributes) that can assist Convention and Visitors Bureaus (CVBs) to establish better operational strategies that maintain their economic sustainability. Furthermore, this study also addressed the event planners and organizers’ perceptions toward the environment and social sustainability, measuring the importance and performance of ecofriendly venues and the availability of disabled access, which showed neither significant importance nor performance. However, as the main purpose of the research was to examine the essential venue selection criteria based on the perceptional lens of the event organizer and planners to MICE operators on achieving business sustainability, the findings of this study provide strategical direction to establish, maintain, and improve their facility, service, and products. The study also finds that there are different needs depending on the types of event organizers and planners.

scholarly journals Performance Measures for the 21st Century [Abstract]

10.28945/4053 ◽  
2018 ◽  
Keyword(s):  
Performance Measures ◽  
Operations Management ◽  
Business Models ◽  
Interdisciplinary Approach ◽  
Secondary Data ◽  
Business Environment ◽  
Future Research ◽  
Multiple Perspectives ◽  
Extended Value ◽  
Traditional Performance

Aim/Purpose: Contemporary organizations and business models challenge traditional performance measures. Some of these measures may not be relevant, and all of them may not be appropriate for measuring some of the critical factors that organizations should focus on in the current business environment. Background: This research-in-progress examines the relevance of traditional performance measures, and uses an interdisciplinary approach for identifying effective known as well as new measures, which reflect the important issues for contemporary organizations. The issue is examined from multiple perspectives, including financial and cost accounting, operations management, strategy, and social responsibility. Methodology: This research-in-progress is based on mixed methods, which include conceptual theoretical analysis of alternative performance measures, as well as quantitative analysis of secondary data, such as financial statement reports. Contribution: The study is expected to identify the most relevant performance measures that organizations should focus on. Furthermore, it will suggest new performance measures that will reflect contemporary technological developments as well as global social values. Findings: The expected findings are to identify which known performance measures are still relevant and which ones might be misleading, and to suggest new performance measures. Recommendations for Practitioners: The findings of this study may enable organizations improve their performance by measuring the important factors that predict their ongoing success. Recommendation for Researchers: Researchers should consider an interdisciplinary approach for identifying effective performance measures. Impact on Society: Improved performance measures would enable extended value creation by organizations, which would increase the wealth of society at large. Future Research: As new business models emerge, it would be worthwhile to continue the evaluation of the relevance of traditional performance measures, as well as the effectiveness of new ones.

The Effect of Prisons on Crime

2016 ◽  
Author(s):  
Sarah Tahamont ◽  
Aaron Chalfin
Keyword(s):  
Empirical Evidence ◽  
Empirical Research ◽  
Capital Punishment ◽  
Empirical Studies ◽  
Policy Implications ◽  
Long Term Effects ◽  
Homicide Rates ◽  
The Relationship ◽  
Insight Into

This chapter presents empirical evidence regarding the (in)effectiveness of prisons for reducing crime. The authors begin with a brief discussion of the mechanisms through which incarceration affects crime, followed by a review of research that presents empirical evidence on the relationship between prisons and crime. This section separates empirical research on the total effect of prison on crime from empirical studies intended to isolate the deterrent or incapacitation effects of prison. Death penalty studies are also reviewed for insight into whether capital punishment has any short- or long-term effects on homicide rates. The chapter concludes with a brief discussion of the policy implications that follow from the empirical research on prison effects on crime.

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