Shareholder value – Down to the basics

In regard of the discussion about shareholder value, I thought it necessary to lay out the basics first before further approaching into the topic. Therefore I am currently studying the book “Shareholder value” by Rappaport, trying to understand the underlying principles and definitions of shareholder value to fertilize future discussions.

One important note I found already valid in present discussions is the annotation that the actual shareholder value should be thought of as a long-term value and not as a short-term increase in stock rates. The actual value comes from the long-term sustainable growth in value, not in the short-term peak. Therefore measurements taken in present-day industries reflecting “shareholder value” by adding short-term stock value raises should not be considered “shareholder value”.

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