Value Management: The Company's Response to Shareholder Change

Author: John D. Martin (USA)
Publisher:
Publish Date: 2005-08-01
Features: Why do some companies create value for shareholders while others reduce shareholder value? An effective value management tool can produce vastly different results. The number of companies with declining shareholder value far exceeds the star companies that add value on Wall Street—this is exactly what investors don’t want to see. As the call to prioritize shareholder value growth grows louder, corporate executives have begun to increasingly adopt value management methods. As a practical response to shareholder feedback, value management (VBM) allows financial managers to autonomously plan, monitor, and control company operations, but only when it benefits shareholder value. This book was thus created, based on the author’s long-term research findings and extensive studies of numerous companies that have successfully implemented VBM systems. It provides a detailed description of currently common models, such as the Free Cash Flow method, Economic Value Added (EVA) or Market Value Added (MVA) method, and Cash Flow Return on Investment (CFROI). Drawing on lessons from the application of VBM management methods across different industries, the book analyzes the strengths and weaknesses of each model, guiding managers on how to select and apply the most suitable model for their enterprise. The core of value management is to encourage employees to think and work with an owner’s mindset. By establishing evaluation and incentive mechanisms focused on capital markets, this book links employee performance with corporate rewards and punishments, helping capital operators build a virtuous cycle of value creation that satisfies all shareholders.