Creating Shareholder Value by Alfred Rappaport – In this substantially revised and updated edition of his business classic, Creating Shareholder Value. only reliable measure, is whether it creates economic value for shareholders. of his business classic, Creating Shareholder Value, Alfred Rappaport. VBM Thought Leader: Alfred Rappaport. Creating Shareholder Value. The New Standard for Business Performance. Alfred Rappaport About Alfred Rappaport.

Author: Kigahn Samunris
Country: Japan
Language: English (Spanish)
Genre: Software
Published (Last): 1 July 2004
Pages: 88
PDF File Size: 15.60 Mb
ePub File Size: 15.52 Mb
ISBN: 926-5-27059-911-2
Downloads: 79876
Price: Free* [*Free Regsitration Required]
Uploader: Goltibar

In too many cases, however, current layoffs are the byproduct of incumbent or prior management’s failure to pursue shareholder value strategies in earlier years. Providing a comparable product at a lower cost than competitors, or providing superior value to the customer through higher quality, special features, or postsale services, are not genuine advantages if the total long-term cost, including the cost of capital, crdating greater than the cash generated by the sale.

While most discussions of corporate purpose address the concerns of various stakeholders, comparatively little alfrec is devoted to who the shareholders of corporate America are today. Institutions, primarily pension funds and mutual funds, hold 57 percent of the stock in the one thousand largest U.

After a decade of downsizings frequently blamed on shareholder value decision making, this book presents a new and indepth assessment of the rationale for shareholder value. Exclusive reliance on shareholder returns, however, has its own limitations.

Creating Shareholder Value: A Guide for Managers and Investors

Our form of government calls for elected legislators and the judicial system to be the mechanisms for collective choice. The theory of a market economy is, after all, based on individuals promoting their self-interests via market transactions to bring about an efficient allocation of resources. Ashiesh Bhatia rated it it was amazing May 08, Waldron, the former chairman of Avon Products, for example, states: If the company invests in a risky project, stockholders can always balance this risk against other risks in their presumably diversified portfolios.


Tyler Olson rated it it was amazing Sep 14, Second, there are workers’ compensation insurance premiums paid by the employer, which are affected by accident rates.

The problem instead is its misuse or nonuse, which has led to value-destroying downsizings for companies and their shareholders and uncalled-for dislocations and pain for employees.

The ultimate test of corporate strategy, the only reliable measure, is whether it creates economic value for shareholders. The question here is whether these measures are linked reliably to the market price of the company’s shares. After all, work force reductions have been largely triggered by structural changes in the economy rather than by transitory business cycles. Corporate management, however, has neither crreating political legitimacy nor the expertise to decide what is in the social interest.

It would, however, be a profound error to view increases in a company’s value as shareholedr concern just for shareholders. Eric Connerly rated it really liked it Apr 28, The stakeholder model that attempts to balance the interests of everyone with a stake in the company makes it easier for corporate managers to justify uneconomic diversification or overinvestment in a declining core business, since these moves are likely to be endorsed by constituencies other than shareholders.

VBM Thought Leader: Alfred Rappaport

Over the next ten years shareholder value will more than likely become the global standard for measuring business performance.

Published December 1st by Free Press first published December 5th The lesson is clear: Eric rated it really liked it Feb 16, Marcus Campeau rated it it was amazing Nov 07, Free Press December Sharehooder Ryan Hanson rated it it was amazing Dec 29, The third factor affecting management behavior is the threat of takeover by another company.

To satisfy these claims management must generate cash by operating its businesses efficiently. Consistent with the above premise, at least four major factors will induce management to adopt a shareholder orientation: Most executives and public policymakers recognize that increases in stock price reflects improvements in productivity and competitiveness, which benefit everyone with a stake in the company and the overall economy.


Many European governments and unions try to protect jobs by making it very costly to lay off employees. Even at extraordinarily low interest rates in Japan, there is virtually no net increase in corporate borrowing because there are so few profitable investment opportunities.

BensonTom Bugnitz Limited preview – Hence, the main audience is corporate managers but the book is equally useful to anyone on the financial m During the summer InvestingByTheBooks will review some older books that we never got around to writing about although we think they are important. On the other hand, providing customer satisfaction does not automatically translate into shareholder value.

When we realize that shareholders are not “them” raopaport are “us,” the case for shareholder value becomes even more compelling. After all, it is productivity that will provide the jobs and the tax base needed for the accomplishment of social goals that are more effectively addressed by government than by the private sector.

Alfred Rappaport – Creating Shareholder Value

This important text makes it blatantly obvious that the short-termism that the shareholder movement often is accused of is a faulty later day rationalization. Within the firm, performance evaluation and incentive schemes are the basic mechanisms for monitoring managerial performance.

BayKay rated it really liked it Sep 06,