Value Migration in the Context of Efficient Market Hypothesis

Abstract

In this article there is presented the issue of value migration processes on capital market according to its degree of efficiency. The discussion primarily focuses on the existence of the value migration phe- nomenon both on effective and ineffective capital market, which is based on the valuation of enterprise market value. Progressive globalization, increase of international competition, growing liberalization of free flow of capital between sectors and branches of economy cause the process of leaving from maximalizing market shares, net book profits and classic measures of company financial valuation based on the foregoing, not authoritative - from the point of view of value forma- tion - income category. International competition in need of sources to finance a business activity extorts from companies gaining over-standard financial results, exceeding the cost of employed capital to run operation activities. A company which does not achieve its main goal - a process of maximalizing its market value - that manifests in lower return on invested capital to its cost, is exposed to value outflow. Dynamic progress of IT and consolidation of capital markets between which unlimited flow of capital occurs favors to this situation. A result of those effects is so called value migration which figures on searching by investors for effective ways of allocation of their capitals. The author of this term A. Slowotzky in the elaboration (15, p. 21) provides a following definition: Migration describes the flow of profit and shareholder wealth across the business chessboard. Value leaves economically obsolete business designs and flows to new business designs that more effectively create utility for the customer and capture value for the producer. The term of value migration is the trademark of the international consulting company Mercer Management Consulting. Value and degree of its creation capacity is the best criterion needed to estimate company's activity in the long period of time. The final point of all acts, actions and decisions which have an influence on the further company activity is its present value expressed in money