Maximize Shareholder Value Research Articles

Shareholder activism: Further evidence on the relationship between activists’ demands and shareholder value creation

AbstractThis research article analyses activist hedge fund campaigns and studies both shareholder value effects around the announcement of a campaign and the value creation over the entire campaign period. Further, we analyze observable returns by campaign objectives. We examine a sample of 197 international activism campaigns, initiated between 2014 and 2019. Significant Cumulative Average Abnormal Returns (CAARs) can be observed in both the short‐term and the entire engagement period event windows. The results from activism differ by an activist investor's objectives and demands. CAARs related to elimination of a general undervaluation, a maximization of shareholder value, and an adjustment of a target firm's capital structure are the highest in our sample. We do not find empirical evidence that board representation or proxy fights increase the CAARs of activist investors’ campaigns. Our study adds to the existing literature by analyzing abnormal returns not only around the announcement of the campaign but also over the entire campaign. We are of the opinion that relying exclusively on short‐term returns poses significant limitations to inferences on shareholder value from activism and therefore applying a longer‐term observation period is warranted.

Mergers and Acquisitions under Common Ownership

We provide new facts about the cross section and evolution of mergers and acquisitions for US public firms. Using a general equilibrium model with a hedonic demand system and data on institutional ownership, we document that mergers are increasingly concentrated among firm pairs with a high degree of product market interaction and a moderate to high degree of common ownership. We estimate how much mergers have raised aggregate corporate profits and reduced consumer surplus and quantify how the anticompetitive effects of mergers are affected by common ownership and shareholder value maximization motives.

Impact Of dividend decision on the market capitalization of the firm: Evidence from Indian large cap companies

The percentage of the profit distributed to the shareholders is known as the dividend. The decision at hand is how much of the company's profit should be divided to the shareholders after taxes have been paid. It also contains the portion of the profit that needs to be invested back into the company. The retained earnings boost the company's potential for future earnings when the present income is reinvested. The amount of retained earnings has an impact on the company's choice of financing as well. The decision to declare a dividend should be made with the goal of maximizing shareholder value in mind. The present study attempted to evaluate the impact of dividend decision on the market capitalization using regression model. The regression analysis model revealed the significant impact of the independent variable on the market price of the share as well as the dividend policy determinants on the subsequent market price variable.

Application of Enterprise Architecture to Decentralized Architecture in Internet Databases

Enterprise architecture is a holistic, hierarchical and abstract description of the essential elements of an organization to maximize shareholder value over time. Enterprise Architecture (EA) is a way to structure enterprise information system elements which can be a set of models and relationships between enterprise elements used in planning, designing, and realizing an enterprise structure, business processes, information systems, and related infrastructure in inside. The database application architecture describes the basic design of the database application to be built. The database architecture describes the interaction diagram between the components that make up the database management system. These components include hardware devices, software, computer networks, and users. Distribution Architecture or Decentralized Architecture has its own advantages and disadvantages.

The nexus between corporate governance, asset structure, and value of listed firms: evidence from Kenya

Shareholders of listed firms are guaranteed reasonable security prices due to enhanced firm value, which translates to global wealth creation. However, firms’ value has declined globally. Therefore, this paper uses a causal-comparative design and panel data regression model to explore the nexus between corporate governance, asset structure, and value of Kenyan-listed firms from 2010 to 2019. Secondary data were extricated from audited financial reports of 51 firms. As hypothesized, the results show a positive relationship between board composition and firm value with a regression coefficient (0.17, p < .05). The composition of the audit committee is positively associated with firm value with a regression coefficient of (0.629, p < .05). A tangible and notable correlation exists between protecting shareholders’ rights and firm value with a regression coefficient of (0.28, p < .05), while financial disclosure was significant with a regression coefficient of (1.15, p < .05). Plant, property and equipment positively and significantly affect firm value with a regression coefficient of (2.10, p < .05), while financial assets had (0.28, p < .05), which was significant. Current assets positively and significantly affect firm value with a regression coefficient of (1.87, p < .05). Finally, the results reveal a positive but insignificant correlation between firm size and value with a regression coefficient of (0.22, p < .05), while the relationship between firm age and value is negative but insignificant with a regression coefficient of (–0.003, p < .05). The study recommends that sufficient managerial effort be directed towards corporate governance and asset structure to maximize shareholder value.

The Effect of Dividend Policy on Corporate Financial Performance

Companies have many different objectives in running their operations. However, the main objective of the company is to maximise shareholder value. Firm value is the result of the company's performance in generating profits and minimising risks. For shareholders, the main benefit of share ownership is the dividends provided by the company. Research on the effect of dividend policy on the financial performance of companies in Indonesia is still relevant to be carried out in order to provide deeper insights for practitioners and academics in the field of finance. In this study, the author will describe the effect of dividend policy, as well as its relation to the company's financial performance, using a descriptive qualitative approach method. Based on the results of the research and discussion above, it can be concluded that dividend policy has a significant influence on the company's financial performance. However, this influence can be positive or negative depending on the conditions and factors that influence dividend policy.

Stock index constituent adjustments and corporate social responsibility: evidence from a quasi-natural experiment of CSI 300 index adjustments

ABSTRACT The stock price index is a thermometer reflecting changes in the stock market, and can convey key information on capital market dynamics and trends to investors. This paper empirically investigates the impact of index adjustments on corporate social responsibility performance by employing the quasi-natural experiment of CSI 300 index adjustments. We find that index additions significantly promote corporate social responsibility performance. Mechanism analysis supports the shareholder value maximisation motivation that drives the fulfilment of corporate social responsibility. In addition, more analyst following and investor attention plays a significant mediating role in the promotion impact of stock index additions on corporate social responsibility. Further analyses show that the positive impact of the stock index additions on corporate social responsibility performance is more pronounced in industries with more competitive product market. However, index deletions do not significantly reduce corporate social responsibility performance, implying that index additions and index deletions have asymmetric effects.

THE ROLE OF FINANCIAL MANAGEMENT IN MAXIMIZING SHAREHOLDER VALUE

This paper examines the principles of corporate finance and their impact on the maximization of shareholder value. Financial management plays a critical role in ensuring the success of a business and achieving the ultimate goal of maximizing shareholder wealth. The article discusses the concept of discounted cash flow analysis, which is a fundamental principle of finance that allows companies to evaluate investment opportunities and make sound financial decisions. In addition, the paper examines the importance of capital structure, including the use of debt and equity financing, and the effect of dividend policy on the value of the firm. The article also highlights the role of financial markets in providing necessary capital to businesses and enabling efficient allocation of resources. Overall, the principles of corporate finance are essential for any business to thrive, and understanding these concepts is crucial for financial managers to make informed decisions that maximize shareholder value.

Undergraduate Management Course that Promotes Existential Development for Business

The modern workplace is broken because it retains a singular focus on shareholder value maximization. This orientation creates a variety of health hazards for workers. However, there are emerging approaches that promote more positive work climates. This report evaluated an undergraduate management course designed to address this issue by advancing principles derived from humanistic management practices. A sample of 234 women and 285 men who were enrolled in a Principles of Management course participated in this new curriculum. Students completed measures of the Numinous (i.e., ultimate existential orientation), personal well-being, conflict management, and empathic listening skills pre- and post- semester. Results indicated significant, positive changes across these four outcome variables. A cross-lagged panel analysis indicated that scores on the Numinous measure appeared to have a causal impact on the personal wellbeing scales. Training programs of this nature may be helpful in providing a long-term solution to improving the quality of the workplace.

To Whom Are Directors’ Duties Owed? Evidence from Canadian M&A Transactions

One of the most contentious issues in corporate law is the proper scope of fiduciary duties. Many scholars have argued that fiduciary duties are owed exclusively to shareholders, while others have advocated a broader conception of directors’ fiduciary obligations, potentially encompassing a wide variety of stakeholder and community interests. This debate has both normative and positive dimensions: Not only are there theoretical disagreements as to whom directors’ duties should be owed, there are also more basic disagreements as to what the law actually requires, including the extent to which business norms supplement (or undermine) legal rules. In Canada, at least, jurisprudential and statutory reforms have broadened the scope of fiduciary duties to extend their protections to stakeholder groups including creditors, employees, and the environment.
 Or have they? In reality, there are reasons to believe that legal standards play a limited role in corporate governance, not least with respect to the fundamental question of in whose interests the corporation is to be governed. For public corporations, a variety of factors, including the professional norms of corporate managers, the realities of public financial markets, and the central role of shareholders in the mechanisms of corporate democracy, strongly encourage directors to prioritize shareholder interests. This article finds evidence of this phenomenon through an empirical study of “fiduciary out” provisions in Canadian M&A agreements. These provisions, which allow directors to abandon committed transactions in order to fulfill their fiduciary duties, are almost universally drafted in terms of maximizing shareholder value. Indeed, in two samples containing more than one thousand M&A agreements, only a single agreement permitted directors to consider non-shareholder interests. This evidence indicates that fiduciary duties are broader in theory than in practice.

Achieving Performance and value creation of a firm

Several applications are management incentive schemes, employee involvement programmes, maximising shareholder value, being customer-centric, and corporate social responsibility. Few management researchers have attempted to systematically evaluate and combine the many methods for improving performance. According to several scholars, the foundation for an organization's longevity and prosperity lies in the different constituency groups that make up its environment. These groups play an important role as both resource providers and recipients. Theoretical traditions contend that responsiveness to particular constituencies should take precedence, whereas stakeholder theory advocates for a situationally appropriate balance between the two. Study analyse various theories of the firm and the performance drivers which boost the performance of the firm or business.

Marketing Strategies and S.W.O.T. Analysis of Asian Paints

With a revenue of Rs 30.2 billion, Asian Paints is the largest paint business in India and the third largest in Asia (around USD 680 million). In the business sector, the corporation is known for its professionalism, rapid expansion, and commitment to maximising shareholder value. Asian Paints has operations in 22 nations and 30 paint production plants worldwide, serving customers in over 65 nations. The group's subsidiaries Berger International Ltd, Apco Coatings, and SCIB Paints, in addition to Asian Paints, are active around the world. Businesses have made a lot of effort to ensure the quality and level of their products. The commercial has a significant obligation to promote companies on a national level. OTP platforms and television. In order to promote their products, brands have begun hiring well-known individuals. For instance, Mr. Ayushmann Khurrana was contacted by JSW Paints for the brand endorsement, while Ranbir Kapoor was contacted by Asian Paints for the same purpose. Both the market for water-based metallic paint and texture paints has seen an upsurge in demand recently. The market for washable water-based paints has expanded and reached new heights thanks to recent breakthroughs and advances.

A Framework for Income, Inheritance, and Wealth Tax in America amid Increasing Income Inequality when the Richest are Leaving even the Rich Far Behind

A Framework for Income, Inheritance, and Wealth Tax in America amid Increasing Income Inequality when the Richest are Leaving even the Rich Far Behind

Investment Project Analysis of PT. Berau Coal Block 5-6 Binungan Using Discounted Cash Flow Method

The evaluation of business projects that have high complexity and uncertainty will require a thorough study since the coal mining industry is a business that has extremely high costs as well as a high risk where there are many uncertainty elements that impact this sector. Blocks 5 and 6 are locations that have previously been mined by PT. Berau Coal in an effort to boost output. PT. Berau Coal now wants to reopen the block 5-6 region to optimize the area that was previously deemed unproductive for mining in an effort to boost coal output there. To assess if the block 5–6 region can be mined once more in an endeavor to increase PT. Berau Coal's production reserves, an analysis is thus required. PT. Berau Coal currently uses the Discounted Cash Flow (DCF) approach to determine the viability of an investment. The mathematical results of the DCF technique will be taken into account by management when making mining decisions. Further research is required to be able to maximize shareholder value because this technique has a restriction in that it does not offer flexible project for management. We obtain an NPV of $14,44 million, an IRR of 67,98%, and a Payback Period of 3.4 years based on the results of the DCF calculations performed on the Block 5-6 project from the mine plan for PT. Berau Coal. There are a number of preparations that must be made for the mining plan for this project, including the building of farm roads to replace existing roads that are part of the mining plan and pumping operations to lower the water level in the mining plan area. There is no new investment required because the infrastructure for mining equipment is already a part of the contractor selection component and the infrastructure for processing coal already uses it.

The effectiveness and risks of expansive monetary policy under financialization

This paper incorporates low interest rates into a framework of post Keynesian theory of the firm under financialization and uses Compustat data to provide an empirical analysis of firm behavior in the eurozone for the period 2000–2018. It reasons that expansive monetary policy targeting low interest rates will only be effective in promoting investment in a scenario where shareholder value orientation (SVO) tightens the finance constraint on growth-maximizing managers. In contrast, when shareholder value maximization becomes the goal of the firm, expansive monetary policy may not only be ineffective in promoting growth but might actually be dangerous because it fosters financial fragility and promotes SVO. Data suggest that financialization in the eurozone represents a shift in the objectives of the firm toward maximizing free cash flows. However, there is no evidence that expansive monetary policy fostered leverage and an equity reduction in the eurozone. Still, the analysis shows that low interest rates were largely ineffective in fostering investment during the period 2008–2018. Therefore, monetary policy seems insufficient to promote investment and growth. Both expansionary fiscal policy and legal reforms that control shareholder power are needed.

Corporate collaborations, decarbonization and equity value creation

PurposeOpportunities for shareholder value creation from deep decarbonization in fossil fuel and related industries may be unlocked with a permanent change in corporate governance practices. The purpose of this study is to highlight the conceptual links between corporate collaborations, decarbonization and equity value creation to enable the large-scale reallocation of funds necessary to halve carbon emissions by the end of this decade.Design/methodology/approachConsistent with shareholder value maximization, the author uses the constant dividend growth framework to show that a permanent change in corporate governance practices can impact expectations of future cash flows and required rates of return. This study includes a simulation to explore how perpetual corporate collaborations on decarbonization that influence the key equity value drivers can add value to the equity of collaborative firms.FindingsPerpetual corporate collaborations with key stakeholders focused on equity value drivers hold great potential for accelerating the reallocation of funds to low-carbon assets. Simulation results suggest that relatively small changes, especially in required rates of return, may result in substantial increases in equity values for collaborative leaders in deep decarbonization.Originality/valueThis study identifies new sources of shareholder value from long-term corporate collaborations with key stakeholders on deep decarbonization. A collaborative focus on important equity value drivers can attract capital also to hard-to-abate industries and initiate sharp cuts in carbon emissions. Corporate governance practices, thus, reformed render shareholder value creation incentive compatible with rapidly decarbonizing global supply chains, making it possible to meet climate action goals by 2030.

A Hybrid Improvement on Board's Role to Block Hostile Takeover

Whether boards should be allowed to block hostile takeovers is a complicated issue. Based on different value orientations, U.S. and U.K. set contrary regulations. Under U.K. regulations, the board of corporation shall apply the “No frustration” principle when corporation faces a takeover from another entity. While the regulations of the U.S. allow the board to defend hostile takeover by imposing a series of measures under the standards of Unocal and Revlon, current regulations are imperfect in that they are unable to correct the actions of the board timely. Therefore, the needs for improvement to protect shareholders' interests still exist. Aiming to shareholder value maximization, this article proposes a possible solution for improvement and calls on an open environment of power allocation between board and shareholders.

Corporate Governance Mechanisms and Financial Performance of Listed Companies in Nigeria

This study investigated the relationship between corporate governance mechanisms and financial performance of listed consumer goods manufacturing firms in Nigeria for the period of 2011 to 2020. The specific objectives were to investigate the relationship between board size on return on equity, and evaluate the relationship between board independence on return on equity, board compensation on return on equity and board diligence on return on equity of listed consumer goods manufacturing firms in Nigeria. The study adopted ex post facto and correlational research designs. The population of the study was twenty one (21) listed consumer goods manufacturing firms as at the end of 2020. The study used a census approach to determine a sample size of twenty one (21) firms. Secondary data from the published annual financial reports of the sampled firms were used for data analysis. Descriptive statistics, correlation coefficient and multivariate analysis were used. The results disclosed that board size has a negative and insignificant relationship with return on equity of listed consumer goods manufacturing firms in Nigeria; board independence has a negative and significant relationship with return on equity of listed consumer goods manufacturing firms in Nigeria; board compensation has a positive and significant relationship with return on equity of listed consumer goods manufacturing firms in Nigeria; and board diligence has a negative and significant relationship with return on equity of listed consumer goods manufacturing firms in Nigeria. The study concludes that corporate governance mechanisms influence the financial performance of listed consumer goods manufacturing firms in Nigeria. The study recommends among others that board sizes should be enhanced as this allows for the appropriate combination of directors. A large board increases the chance of directors having appropriate knowledge, skill and networks. The knowledge, skill and networks of directors may increase the performance of an organization; non-executive directors who act as professional advisers to ensure competition among insiders encourage measures consistent with maximization of shareholder value.

Effect of Corporate Financing on Shareholder's Value Maximization of Nigerian Pharmaceutical Sector

Effect of Corporate Financing on Shareholder's Value Maximization of Nigerian Pharmaceutical Sector

CEO talk of sustainability in CEO letters: towards the inclusion of a sustainability embeddedness and value-creation perspective

PurposeThis paper aims to examine how CEO talk of sustainability in CEO letters evolves in a period of increased expectations from society for companies to increase their transition towards becoming more sustainable and to better account for progress and performance within the sustainability areas.Design/methodology/approachBy adopting an interpretive textual approach, the paper provides a careful analysis of how CEO talk of sustainability in CEO letters of large listed Swedish companies developed during 2008–2017.FindingsThe talk of sustainability is successively becoming more elaborated, proactive and multidimensional. CEOs frame their talk by adopting different perspectives: the distinct environmental, the performance and meso, the product-market-oriented and the sustainability embeddedness and value creation. The shift towards an embeddedness and value-creation perspective in the later letters implies that the alleged capitalistic and short-sighted focus on shareholder value maximisation might be changing towards a greater focus on sustainability embeddedness as an important goal for succeeding with the transition towards a sustainable business.Practical implicationsThe findings are relevant for policymakers and government bodies when developing policies and regulations aimed at improving the positive impact of companies on global sustainable development. Findings are also useful for management teams when structuring their sustainability talk as a response to external pressure.Social implicationsThe findings provide relevant input on how social norms, values and expectations are shaping the corporate discourse on sustainability.Originality/valueThe findings of this study contribute to an increased understanding of the rhetorical response in influential CEO letters to the surrounding sustainability context, including new national and international policies as well as sociopolitical events and discourses related to sustainability. This offers a unique frame of reference for further interpretational work on how CEOs frame, engage in and shape the sustainability discourse.