While many companies are focused on generating shareholder value, defining shareholder value and measuring its growth can be challenging. Shareholder value, which reflects many tangible and intangible elements of a corporation, is a complex, multifaceted concept that can be measured in many different ways, including through corporate valuation techniques, different return measures and growth metrics. […]

From a classical economic perspective, the company and shareholder relationship can be viewed as an exchange of economic interests: a shareholder provides capital to a company today in exchange for the expectation of receiving that capital back plus a return on that capital at some point in the future. This view of company and shareholder […]

The discipline of financial engineering has been criticized on the ground that it blindly follows statistical and mathematical paths that lead, at times, to the edge of or over economic cliffs. Despite the risks involved in reliance on quantitative correlations and measures that struggle to capture the unpredictability and irrationality that often drives markets, financial […]

Many valuation methods are directly or indirectly based on projecting potential firm performance in the future. While it is sensible to consider a firm’s ability to create future economic value in the valuation process, forward-looking valuation approaches all share the analytical weakness that the future cannot be predicted with certainty. Due to the negative consequences […]

Inherent in the process of strategic planning is assumptions about levels of business certainty. One way to approach strategic planning is to take what is known about a firm and market conditions and design an approach for maximizing shareholder value based on that knowledge. In this approach, certainty is often viewed as positive and uncertainty […]

Recent stock market volatility, and the damage that volatility has caused, raises a key question: Is financial liquidity always a good thing? In highly interconnected financial markets where events and even inaccurate perceptions of risk can destroy real economic value, liquidity should best be viewed by policymakers and investors as having both negative as well […]