The theory of shareholder value is an issue that has to comprise a dichotomy in terms of the standpoint from which it is looked at. Shareholders and the management of a company in many cases still represent counterparts whereas interests do not continuously align.
In this study shareholder value theory is approached by investigating the shareholder perspective in correspondence to shareholder wealth gains in the UK market environment through the implementation of six major financial performance measurement methods including: the Price/ Earnings ratio, the Discounted Cash Flow Model, the Dividend Valuation Model, the Economic Value Added, the Market Capitalization, the Capital asset Pricing Model and the shareholder value approach as suggest by Alfred Rappaport. Having applied them to six selected stock listed companies enabled the author to develop a shareholder value ranking according to their financial performance and the deriving shareholder value dedication.
Table of Contents
- Chapter 1: Introduction
- Chapter 2: Methodology
- 2.0 Methodology
- 2.1 Definition
- 2.2 Approaches
- 2.3 Applied Approach
- 2.4 Time Horizons
- 2.5 Research Techniques
- 2.6 Research Limitations
- Chapter 3: Literature Review
- 3.0 Literature Review
- 3.1 The financial market
- 3.1.1 Providers of Finance - an international mapping
- 3.1.2 The financial market
- 3.2 Corporate Objectives
- 3.3 Shareholder value theory
- 3.3.1 General Information - Introduction
- 3.4 Financial Ratios
- 3.4.1 Price-Earnings Ratio (P/E - Ratio)
- 3.4.2 Discounted Cash Flow Model
- 3.4.3 Dividend Valuation Model
- 3.4.4 Economic Value Added (EVA Model)
- 3.4.5 Market Capitalization
- 3.4.6 Capital Asset Pricing Model
- 3.4.7 Shareholder Value Approach - A. Rappaport
- Chapter 4: Analysis
- 4.0 Analysis
- 4.1 Price/Earnings Ratio
- 4.2 Discounted Cash Flow Model
- 4.3 Dividend Valuation Model
Objectives and Key Themes
This study aims to investigate shareholder value theory from the shareholder perspective, focusing on shareholder wealth gains within the UK market. This is achieved by applying six major financial performance measurement methods to analyze the financial performance and shareholder value dedication of selected UK stock-listed companies.
- Shareholder Value Maximization in the UK Market
- Application of Financial Performance Measurement Methods
- Comparative Analysis of Shareholder Value Across Companies
- The Relationship Between Financial Performance and Shareholder Value
- Shareholder and Management Alignment of Interests
Chapter Summaries
Chapter 1: Introduction: This chapter likely provides a general introduction to the topic of shareholder value, its importance, and the scope of the study. It would set the stage for the research by outlining the central problem and the study's objectives. It may also briefly introduce the methodology and structure of the dissertation.
Chapter 2: Methodology: This chapter details the research methodology employed in the study. It defines key concepts, outlines the approaches used to analyze shareholder value, specifies the time horizon considered, describes the research techniques implemented, and acknowledges any limitations inherent in the methodology. The chapter ensures the study's rigor and reproducibility by clearly explaining the research design.
Chapter 3: Literature Review: This chapter presents a critical review of existing literature on shareholder value theory and related financial concepts. It likely covers the financial market structure, corporate objectives (profit maximization, sales maximization, survival, social responsibility, risk, and communication), and a detailed examination of various financial ratios and models used to assess shareholder value. It establishes a theoretical foundation for the empirical analysis conducted later. The chapter will extensively cover the Price-Earnings Ratio, Discounted Cash Flow Model, Dividend Valuation Model, Economic Value Added, Market Capitalization, and Capital Asset Pricing Model, as well as Alfred Rappaport's shareholder value approach. The significance of each method in evaluating shareholder value will be thoroughly discussed, along with the limitations and potential biases associated with their application.
Chapter 4: Analysis: This chapter presents the empirical analysis of the data gathered. It applies the methodologies outlined in Chapter 2 to the chosen companies, using the models and ratios described in Chapter 3. The chapter focuses on the results obtained from each financial performance measurement method (Price/Earnings Ratio, Discounted Cash Flow Model, and Dividend Valuation Model). The findings are likely presented and interpreted, providing a comparative analysis of shareholder value across the selected companies. The chapter critically evaluates the results, discussing potential limitations and offering insights into the relationships between financial performance indicators and the overall shareholder value created.
Keywords
Shareholder value, financial performance, financial ratios, discounted cash flow, dividend valuation, economic value added, market capitalization, capital asset pricing model, UK stock market, shareholder wealth, corporate finance, investment analysis.
Frequently Asked Questions: Comprehensive Language Preview
What is the purpose of this document?
This document provides a comprehensive overview of a study focusing on shareholder value theory, specifically examining shareholder wealth gains within the UK market. It includes the table of contents, objectives and key themes, chapter summaries, and keywords.
What are the main objectives of the study?
The study aims to investigate shareholder value theory from the shareholder perspective, focusing on shareholder wealth gains within the UK market. This is achieved by applying six major financial performance measurement methods to analyze the financial performance and shareholder value dedication of selected UK stock-listed companies. Key themes include shareholder value maximization in the UK market, application of financial performance measurement methods, comparative analysis of shareholder value across companies, the relationship between financial performance and shareholder value, and shareholder and management alignment of interests.
What methodology is used in the study?
Chapter 2 details the research methodology, including definitions of key concepts, approaches used to analyze shareholder value, time horizons considered, research techniques implemented, and research limitations. The methodology ensures rigor and reproducibility.
What topics are covered in the literature review?
Chapter 3 provides a critical review of existing literature on shareholder value theory and related financial concepts. Topics covered include the financial market structure, corporate objectives, and a detailed examination of various financial ratios and models used to assess shareholder value, such as the Price-Earnings Ratio, Discounted Cash Flow Model, Dividend Valuation Model, Economic Value Added, Market Capitalization, and Capital Asset Pricing Model, as well as Alfred Rappaport's shareholder value approach. The chapter discusses the significance, limitations, and potential biases of each method.
How is the analysis conducted?
Chapter 4 presents the empirical analysis, applying the methodologies outlined in Chapter 2 to the chosen companies, using the models and ratios described in Chapter 3. The chapter focuses on the results from each financial performance measurement method (Price/Earnings Ratio, Discounted Cash Flow Model, and Dividend Valuation Model), providing a comparative analysis of shareholder value across the selected companies and discussing the relationships between financial performance indicators and shareholder value.
What are the key financial performance measurement methods used?
The study utilizes six major financial performance measurement methods: Price-Earnings Ratio, Discounted Cash Flow Model, Dividend Valuation Model, Economic Value Added, Market Capitalization, and Capital Asset Pricing Model.
What is the scope of the study?
The study focuses on shareholder value maximization within the UK stock market, analyzing selected UK stock-listed companies.
What are the key words associated with this study?
Shareholder value, financial performance, financial ratios, discounted cash flow, dividend valuation, economic value added, market capitalization, capital asset pricing model, UK stock market, shareholder wealth, corporate finance, investment analysis.
What is included in the chapter summaries?
The document provides summaries of each chapter, outlining the content and purpose of each section: Introduction, Methodology, Literature Review, and Analysis.
Where can I find a detailed table of contents?
The document includes a detailed table of contents outlining the structure of the study and the sub-sections within each chapter.
- Quote paper
- Tony Müller (Author), 2011, A Study on the Integrated Approach of Shareholder Value Analysis, Munich, GRIN Verlag, https://www.grin.com/document/211367
