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Article- 10 ways to create shareholder value (Principle 1 (Dont manage…
Article- 10 ways to create shareholder value
destroy long term value, while creating short term value
investors focus on short term goals and hold shares for a short term
Principle 1
Dont manage earnings or provide earning guidance
measure against expected incremental value of future cash flows
forgo investment in value creating opportunities, in attempt to boost short term earnings
principle 2
strategic decisions that maximise expected value, even at the expense of lowering short term earnings
Principle 3
make acquisitions that maximize expected value, even at expense of lowering near term earnings
principle 4
hold assets that only maximize value
principle 5
return cash to shareholders when there no value creating opportunities to invest in
principle 6
Reward CEO and other for delivering long term returns
Principle 7
Reward operating unit executives for adding multi year superior value
Principle 8
reward middle managers and front line staff for delivering superior performance on the key value drivers that they influence directly
Principle 9
Require senior executives to bear the risks of ownership just like shareholders do
Principle 10
Provide investor with value relevant information