Shareholder Value Creation Research Articles

A Company Analysis and Financial Valuation of Coca Cola

This research analyze a comprehensive evaluation of the external and internal environments of The Coca Cola Company, a global leader in the non-alcoholic beverage industry. The SWOT analysis reveals Coca-Colas strengths, including its strong brand influence, market penetration, and diverse product portfolio, while also identifying weaknesses such as reliance on core products, environmental issues, and market saturation. Its opportunities lie in product innovation, expansion into emerging markets, and sustainable development strategies, while threats include health trends, regulatory pressures, and increasing competition. Internal analysis evaluates Coca Cola's profitability, liquidity, and resources, highlighting its financial stability, strong brand value, and efficient global operations. Despite challenges such as slowing revenue growth and dependence on carbonated beverages, Coca Colas sustained profitability and strategic adaptability position it as a long-term industry leader. The risk assessment emphasizes issues like market competition, changing consumer preferences, and supply chain disruptions, offering recommendations for investors, such as focusing on long-term returns and closely monitoring external pressures. Coca Colas strategic priorities, including product diversification, sustainability, and expansion into emerging markets, lay the foundation for future growth and value creation for shareholders. This research concludes that Coca Cola remains a stable and profitable investment choice, and with its innovation and market adaptability, its future remains promising.

The Dilemma Between Shareholder Value and Long-term Business Sustainability

Purpose: This study investigates the tension between short-term shareholder value creation and long-term business sustainability in publicly traded companies. It explores how firms balance the pressure for immediate financial returns with the need to invest in sustainable practices for future viability. Research Design and Methodology: The research employs a Systematic Literature Review (SLR) methodology, analyzing existing literature on strategic frameworks such as ESG integration, strategic agility, and shared value creation. The study synthesizes insights from relevant academic sources to comprehensively understand how companies manage the conflict between short-term and long-term objectives. Findings and Discussion: The findings reveal that companies often prioritize short-term profits due to shareholder pressure, which can hinder long-term sustainability efforts. However, firms that adopt strategic agility and integrate ESG into their core strategies are better equipped to navigate future risks and maintain competitiveness. The study also highlights the effectiveness of shared value creation in helping companies align profitability with social and environmental responsibilities, demonstrating that sustainability practices contribute to long-term shareholder value. Implications: This study offers practical implications for corporate management, emphasizing the need for a balanced approach that meets both short-term financial goals and long-term sustainability. It calls for increased transparency, stakeholder engagement, and adopting integrated reporting to enhance corporate accountability. Future research could further explore how smaller firms and industries address this dilemma.

Creating Shareholder Value by Improving Training and Health and Safety

Creating Shareholder Value by Improving Training and Health and Safety

Shareholder value creation of eva and traditional accounting measures – evidence from india

Shareholder value creation of eva and traditional accounting measures – evidence from india

A Critical Analysis of Associated British Foods PLC Shareholder Wealth Creation in the Five-Year Period From 2017 to 2021

This study examines Associated British Foods PLC's (ABF) performance in maximizing shareholder wealth over a five-year period from 2017 to 2021. Utilizing a mixed-method approach combining quantitative financial analysis with qualitative assessment of strategic factors, the research investigates ABF's share price performance, dividend policies, and key financial ratios. The study also compares ABF's performance with its industry peer, J Sainsbury PLC, to provide context within the competitive landscape. Findings reveal that despite initial underperformance against the FTSE 350 index, ABF demonstrated significant recovery, particularly in 2021/22, with improved share price performance and dividend payouts. The company consistently maintained higher net profit margins and lower debt ratios compared to its competitor, indicating effective cost management and a conservative financial structure. ABF's diversified portfolio and focus on innovation and sustainability appear to have contributed to its resilience and ability to create shareholder value. However, areas for improvement, such as asset utilization efficiency, were identified. This research contributes to the understanding of shareholder value creation strategies in the food and retail sectors, offering insights for both academics and practitioners in the field of corporate finance and strategic management.

The Influence of Educational Diversity on Shareholder Value Creation in South African Corporate Boards

This study investigates the influence of board education diversity on shareholder value creation of South African non-financial companies listed on the JSE for the 10 years from 2013 until 2022. In this study, a quantitative quasi-experimental design was used. Data were collected from 2013 to 2022 from 101 non-financial companies listed on the JSE. The final sample consisted of 1010 company-year observations. The study measured board education level diversity using the proportion of board members with master’s degrees, the proportion of board members with PhD and the Blau index for board education level diversity. On the other hand, the proxies of shareholder value creation included the standardised market value added, market-to-book ratio and Tobin’s Q. A fixed effects panel data regression model was employed to estimate the influence of board members’ education diversity measures on shareholder value creation measures. Based on linear models, the proportion of board members with master’s degrees and the proportion of board members with PhDs negatively influence all shareholder value creation measures. In contrast, BI_BED positively impacts all shareholder value creation measures. Concerning curvilinear quadratic models, all board members’ education diversity measures positively and negatively impact all shareholder value creation measures, highlighting an inverted U-shaped effect. This study advances the understanding of the double-edged sword effect of educational diversity on shareholder value creation in South African corporate boards.

Does corporate board gender diversity influence shareholder value?

This study investigates the influence of board gender diversity on the shareholder value of South African-listed non-financial companies on the JSE from 2013 to 2022. The study used a quantitative quasi-experimental method to examine the influence of board gender diversity on shareholder value creation measures from a multi-theoretical perspective. The board gender diversity measures include the proportion of women directors on the board, the Blau index for board gender diversity, and dummy variables indicating the presence of one, two, three, or more women directors on the board, as well as skewed board, tilted board, and balanced board. Shareholder value creation is proxied using standardised market value added, market-to-book ratio, and Tobin’s Q. The study utilises fixed effects models based on linear and curvilinear models to test the hypotheses. According to linear models, all board gender diversity measures demonstrate a significant positive, negative, or no effect on shareholder value creation measures, aligning with the multi-theoretical perspective of corporate governance research. However, curvilinear quadratic models suggest that the Blau index for board gender diversity and the proportion of women directors on board positively and negatively affect shareholder value creation, highlighting an inverted U-shaped effect. The results recognise the "too much- of- a -good- thing” effect and a possible optimal(or worse) level of board gender diversity as crucial. In conclusion, this study demonstrates that the claim of the ‘‘one size fits all’’ board gender diversity mechanism in creating and maximising shareholder value, often implicitly stated by regulators and advisors, may be misleading.

Does dividend distribution policy disclosure create shareholder value?

Does dividend distribution policy disclosure create shareholder value?

‘E’ of ESG and firm performance: Evidence from China

‘E’ of ESG and firm performance: Evidence from China

Exploring value relevance of EVA over different stages of business lifecycle

Purpose This study aims to determine whether the financial ecosystem is reliable for evaluating a company’s financial performance at various lifecycle stages or whether value-based performance metrics like Economic Value Added (EVA) are the most comprehensive indicators regardless of the company’s lifecycle stage. The evaluation will analyse the importance of value-based and accounting performance benchmarks (EVA, Return on Capital Employed, Return on Equity and Earnings per Share) in creating shareholder value, as measured by market value added, throughout the company’s lifecycle. Design/methodology/approach This study is based on a robust empirical analysis of 228 Indian firms listed on the National Stock Exchange Nifty 500 Index from 2006 to 2023. By considering firms of different sizes and ages, the authors aim to capture and analyse any distinct impact across various stages of their lifecycles. Using quantile regression for analysis equips the authors to effectively address extreme events such as the 2008 global financial crisis and the COVID-19 pandemic, making the method particularly suitable for conditionally distributed samples based on size and age. Findings The research reveals that various performance indicators are crucial at different stages of a company’s lifecycle for generating wealth for shareholders. However, considering the significance of the EVA measure, it is recommended that policymakers standardize the calculation of EVA and mandate its disclosure. Originality/value The authors comprehensively analysed the economic value addition relative to a company’s size and age, going beyond previous studies that focused solely on specific size categories. This offers managers valuable insights into aligning business performance measures with the various stages of the business lifecycle.

Maintaining Agricultural Production Profitability—A Simulation Approach to Wheat Market Dynamics

Profitability is a complex notion, intertwined with theoretical, socio-economic, and modern economic considerations. While traditionally linked to monopoly advantages, contemporary views broaden this to include shareholder value creation. In agriculture, profitability faces impediments such as rising input costs, market volatility, and economic disparities, emphasizing technological innovation, market conditions, and policy as crucial determinants. This study presents an econometric simulation model to analyze and forecast wheat production profitability in Poland from 2023 to 2027, providing insights into production efficiencies, market dynamics, and policy impacts. Using a system of recursive equations, the model forecasts profitability, integrating econometric techniques with expert insights. It examines variables like resource use, production levels, and price changes, validated through FADN data. The findings reveal that price relations and production efficiencies are the key to profitability. The model highlights market volatility, particularly through “price scissors”, as the main factor influencing profitability. Favorable price conditions significantly boost profitability and incentivize production. The model is a critical tool for analyzing wheat profitability, highlighting the influence of market and policy changes. Future work could extend the model’s use to other regions or crops, incorporating advanced technologies to improve accuracy. This study offers valuable insights for agricultural economics, aiding stakeholders in strategic decision-making.

Economic value added and working capital efficiency linkages: an Indian context

Purpose This paper aims to explore the relationship between the economic value added (EVA) and the working capital efficiency (WCE) of the listed firms in India. Design/methodology/approach This paper uses annual data of 401 listed companies for the period 2012–2019. Furthermore, the dynamic panel data regression model was used to investigate the relationship between the variables of interest. Findings The results reveal that the net trade cycle (NTC) is significantly and negatively associated with listed firms’ economic value in India, indicating that a shorter NTC generates higher EVA for Indian firms. The authors further explore the association between individual components of the NTC with EVA. The authors also found that an inverse, and significant relationship exists between EVA and the individual components of the NTC. The findings also reported a meaningful relationship between EVA and control variables except for leverage and age. For listed firms, the results suggest that sales growth and firm size are crucial factors driving firms’ EVA. Practical implications Higher WCE enhances shareholder value creation, forming positive stakeholders’ expectations toward the company. Originality/value Over the years, many studies have been conducted to determine the relationship between WCE and traditional measures of firms’ profitability. However, hardly any study finds out the impact of WCE on the value-based measures of firms’ performance. This study fills the gap in the existing literature by analyzing the impact of WCE on firms’ EVA.

How one company drives ownership behavior to innovate and create shareholder value: The case of Varian Medical Systems

How one company drives ownership behavior to innovate and create shareholder value: The case of Varian Medical Systems

Board nationality diversity and shareholder value creation

The study examined the influence of board nationality diversity on shareholder value creation of non- financial companies listed on the JSE for a 10- year period from 2013 to 2022.The study used quantitative quasi-experimental research design. The study measured board nationality diversity using proportion of foreign directors on board, Blau index for board nationality diversity, dummy variables for one, two and three or foreign directors. The proxies of shareholder value creation included standard market value added, market- to book ratio and Tobin’s Q and fixed effects model based on linear and curvilinear models were used to test the hypotheses. Main findings of the study demonstrate that proportion of foreign directors on board has an insignificant negative impact on standardised market value added and Tobin’s Q, while significant negative impact on market to book ratio. Blau index for board nationality diversity has insignificant negative impact on standardised market value added and market to book ratio, yet insignificant positive impact on Tobin’s Q. One foreign director on board has significant positive impact on standard market value added and market to book ratio, while insignificant positive impact on Tobin’s Q. Two and three foreign directors on board have insignificant positive impact on all shareholder value creation measures. In relation to curvilinear models, proportion of foreign directors on board and Blau in index for board nationality diversity have both positive and negative impact on all shareholder value creation measures highlighting an inverted U- shaped effects.

When does digital merger and acquisition create shareholder value? An empirical investigation in the Chinese context

When does digital merger and acquisition create shareholder value? An empirical investigation in the Chinese context

Sustainable Pathways: ESG Disclosure Performance and Optimization in China

Environmental, Social, and Governance (ESG) disclosures are pivotal in steering listed companies toward a balanced trajectory of economic efficiency and environmental/social accountability. Disclosure of ESG information can enhance consumer confidence, create shareholder value, and promote sustainable corporate development. Based on the ESG information disclosure data of Chinese listed companies, this study investigates and empirically analyzes the frequency, content, and quality of ESG information disclosure by Chinese listed companies using a mixed-methodological research approach combining qualitative and quantitative approaches. The findings indicate a low and unreliable frequency of ESG disclosure among Chinese listed companies, with a predominant focus on descriptive content primarily in the “E” and “G” dimensions, while neglecting information disclosure in the “S” dimension. The results of subgroup analyses show that industry classification and the regional economic development level do not increase the disclosure rate. Although the nature of ownership, industry classification, and the level of regional economic development can contribute to improving the overall quality of disclosure, there are differences in the “E”, “S”, and “G” dimensions. In addition, mandatory disclosure requirements can improve disclosure quality, but some differences in the “G” dimension are not significant. The findings provide empirical support for improving the ESG disclosure performance of Chinese listed companies to achieve the “dual-carbon” goal.

Corporate Investment Slowdowns in the Context of Financialization: Firm-level Evidence from Poland

ABSTRACT This paper explores two channels through which financialization affects corporate investments: institutional ownership and shareholder value orientation. Employing the GLMM approach, we analyze firm-level data of companies listed on the Warsaw Stock Exchange and identify a significantly negative relationship between financialization-related factors and fixed investments. Specifically, the results suggest that both institutional investors and profit distribution to shareholders inhibit corporate investments in Poland. Notably, foreign, corporate, and large individual shareholders may also influence investment activity by implementing a shareholder value creation strategy.

Does environmental, social and governance performance affect acquisition premium?

PurposeFrom a target perspective, this paper aims to examine the impact of environmental, social and governance (ESG) performance on mergers and acquisitions (M&A) transaction valuations.Design/methodology/approachThis paper uses a sample of 629 international transactions conducted between 2002 and 2020. Ordinary least squares (OLS) regression was applied by using ESG aggregate score and the three ESG pillars: environment, social and governance.FindingsThis paper finds that the ESG performance of targets has a negative and significant impact on acquisition premiums. However, this paper finds that targets receive lower premiums by increasing their ESG score, suggesting that targets would do better to focus on ESG to increase shareholder wealth. Thus, results of this paper support the view that ESG-focused firms create shareholder value through the M&A process. Furthermore, results of this paper indicate that environmental and social aspects of ESG drive the acquisition premium. The governance score does not seem to be related to acquisition premiums.Originality/valueTo the best of the authors’ knowledge, this study is the first study to assess whether ESG performance impacts the valuation of M&A transactions by decomposing ESG into its three components.

Shareholder Value Creation Of Selected Companies In Automobile Industry

The primary objectives of any organization are to maximize profit and maximize shareholders wealth. Hence, shareholder value creation has become the main mantra intoned with solemnity at every annual general meeting and in every annual report of the companies. In view of this, in this research, it is intended at analysing the shareholder value creation of selected companies in automobile industry in NSE Nifty Index. The financial variables have intrinsic value, market capitalization, high and low price of shares for 4 companies listed on NSE Nifty for 10 years i.e., from 1st April 2013 to 31st March 2023. From this study results indicated that, all companies could able to create the positive results of value creation. It indicates that the companies could create the good image in the minds of investors. Hence, it could be concluded that the positive results lead to positive manner of the market, whereas negative results lead to negative manner of the market. The hypothesis is based on conducted tests. Therefore, this study will be useful to investors in knowing the status of all selected companies and industries who decide to retain with the company. Thus, this study has social utility to assist the investors for parking of their money.

Can Strategy Address the Climate Crisis Without Losing its Essence?

AbstractHow should academic fields take on the existential risks created by the climate crisis? What can business schools do to accelerate the decarbonization of business required to save our species? In their Point, Bansal et al. argue that the field of strategic management is complicit in bringing about our current crisis, and they propose to reformulate the field's very foundations to help get us out. In our Counterpoint, we show why we agree with the diagnosis but argue why we are sceptical of the cure. Strategic management incubated in business schools devoted to creating shareholder value, and its central frameworks commit it to this mission, making it fundamentally impossible to reform. The adjustments suggested by Bansal et al. might nudge what is published in journals but will not solve the bigger challenge. If we are to turn back from the climate disaster and begin the process of mitigation and remediation, we need to equip firms to decarbonize their operations as quickly as possible, and to create new kinds of enterprise to bring about the clean energy transition. Given its history and methods, organization theory may be better equipped to take on this role.