Abstract
This paper aims to explain what shareholder value creation means, how the present emphasis on shareholder value measurement as a strategic initiative has developed in management practice and the present day tools and techniques of shareholder value creation and measurement. The shareholder value creation approach helps to strengthen the competitive position of the firm by focusing on wealth creation. It provides an objective and consistent framework of evaluation and decision-making across all functions, departments and units of the firm. It can be easily implemented since cashflow data can be obtained by suitably adapting the firm’s existing system of financial projection and planning. The only additional input needed is the cost of capital. The adoption of the shareholder value creation approach does require a change of the mind-set, and educating the managers about the shareholder value approach and its implementation.
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