Further, Rappaport presents provocative new insights on shareholder value of his business classic, Creating Shareholder Value, Alfred Rappaport. It’s become fashionable to blame the pursuit of shareholder value for the ills besetting corporate America: managers and investors obsessed with next quarter’s. VBM Thought Leader: Alfred Rappaport. Creating Shareholder Value. The New Standard for Business Performance. Alfred Rappaport About Alfred Rappaport.

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Refresh and try again. Return to Book Page. Many European governments and unions try to protect jobs by making it very costly to lay off employees. And it is at the divisional and business unit levels that most resource allocation decisions are made in decentralized organizations. According to Rappaport given that investors increasingly value bonds by discounting future cash flows, it stands to reason that they value stocks in the same fashion. Duke Joo rated it really liked it May 13, In light of these developments, a reassessment of the fundamental rationale for the shareholder value approach is warranted.

Entering the s CEOs of many public companies were relieved to see Wall Street raiders move backstage. However, if privatization does materialize, the transition from “them” to “us” will be complete.

Vlaue active market for corporate control places limits on the divergence of interests between management and shareholders. Layoffs are a very painful short-term price that must be paid for remaining competitive. Thus, trying to increase shareholder value includes handling all the difficult choices between investing now to hopefully generate higher cash flow in the future.

Hence, the main audience is corporate managers but the book is equally useful to anyone on the financial m During the summer InvestingByTheBooks will review some older books that we never got around to writing about although we think they are important. Strong arguments and empirical evidence va,ue given to explain the market’s valke mechanism. Rappaport also Co-founded L. Whatever one thinks of raiders and their tactics, the threats of takeovers did prompt CEOs to give long-overdue focus to delivering value for shareholders.

The steady improvement in creaying safety over the years is more reasonably explained by the employer’s strong economic incentives to avoid shareholdeg. Providing a comparable product at a lower cost than competitors, or providing superior value to the customer through higher sharehloder, special features, or postsale services, are not genuine advantages if the total long-term cost, including the cost of capital, is greater than the cash generated by the sale. Their primary approach has been to shine the spotlight on underperforming companies and promote changes in either corporate strategy or in management itself.


After a decade of downsizings frequently blamed on shareholder value decision making, this book presents a new and indepth assessment of the rationale for shareholder value. Shareholders are not the frequently demonized wealthy, self-serving Wall Street caricatures, but instead are largely individuals who invest human capital in their place of employment and financial capital across a broad cross section of the economy.

The lesson is clear: To ask other readers questions about Creating Shareholder Valueplease sign up. How can employee interests be sharehoolder with shareholder interests in the face of restructuring and layoff announcements shareholddr so often trigger increases in the share price? I believe that the better solution lies in offering employees meaningful incentives for creating value. The argument is that because employees are now also shareholders who will benefit from efficiency-enhancing plant closings and layoffs, they would support these value-creating actions.

Waldron, the former chairman of Avon Products, for example, states: But stakeholders must perceive the value-sharing process to be fair before they can be expected to maximize their commitment to a company. Government regulation that presumably “helps” companies to act in the social interest invariably leads to even greater employee insecurity. The only compelling takeover defense is to close the “value gap” by delivering superior shareholder value.

This is not a new idea. The theory of a market economy is, after all, based on individuals promoting their self-interests via market transactions to bring about an efficient allocation of resources. While many companies used piecemeal applications of the shareholder value approach, such as discounted cash-flow analysis for capital budgeting decisions and for merger-and-acquisition pricing, management thinking largely was governed by a short-term earnings orientation.

It is precisely this casualness toward shareholder interests that precipitated the s takeovers with all their unpleasant and largely avoidable consequences to many employees and communities. The manager, however, can balance a project failure only against the other activities of the division or the company. Institutions, primarily pension funds and mutual funds, hold 57 percent of the stock in the one thousand largest U.


Ashiesh Bhatia rated it it was amazing May 08, Managerial labor markets are an essential mechanism for motivating management to function in the best interests of shareholders.

It is reasonable to expect that many corporate executives have a lower tolerance for risk. This book is an invaluable resource for anyone committed to creating shareholder value or teaching about it.

Creating Shareholder Value: A Guide for Managers and Investors

Second, shareholder returns may be materially influenced by what management believes to be unduly optimistic or pessimistic market expectations at the beginning or end of the performance measurement period. Christine rated it it was amazing Jan 23, Hardcoverpages. Published December 1st by Free Press first published December 5th Must redeem within 90 days. While shareholders subsidized customers for a time, all stakeholders — including shareholders — became the ultimate losers.

The recent acquisition of Duracell International by Gillette is analyzed in detail, enabling the reader to understand the critical information needed when assessing the risks and rewards of a merger from both sides of the negotiating table. Aug 20, InvestingByTheBooks. A business that provides more value than customers are willing to pay for is hardly competitive — and may not even be viable.

Alfred Rappaport – Creating Shareholder Value

This important text makes it blatantly obvious that the short-termism that the shareholder movement often is accused of is a faulty later day rationalization.

Kimberly Miller rated it it was amazing Sep 25, The fourth and final factor influencing management’s shareholder orientation is the labor market for corporate executives. Lance Bertsch rated it it was amazing Nov 05, This view further recognizes that a company’s long-term destiny depends on a financial relationship with sharsholder stakeholder that has an interest in the company.

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