Topic
Shareholder value
About: Shareholder value is a research topic. Over the lifetime, 4358 publications have been published within this topic receiving 149529 citations.
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TL;DR: In this article, the authors test the relationship between shareholders' value, stakeholder management, and social issue participation and find that, while the latter is positively associated with shareholders' wealth, the former is negatively associated with their value.
Abstract: We test the relationship between shareholder value, stakeholder management, and social issue participation. Building better relations with primary stakeholders like employees, customers, suppliers, and communities could lead to increased shareholder wealth by helping firms develop intangible, valuable assets which can be sources of competitive advantage. On the other hand, using corporate resources for social issues not related to primary stakeholders may not create value for shareholders. We test these propositions with data from S&P 500 firms and find evidence that stakeholder management leads to improved shareholder value, while social issue participation is negatively associated with shareholder value. Copyright © 2001 John Wiley & Sons, Ltd.
3,465 citations
TL;DR: In this article, the authors extended the risk management model by theorizing that some types of CSR activities will be more likely to create goodwill and offer insurance-like protection than other types.
Abstract: Do shareholders gain when managers disperse corporate resources through activities classified as corporate social responsibility (CSR)? Strategy scholars have recently developed a theoretical model that links such activities to shareholder value when a firm suffers a negative event; we test key portions of this theory of the ‘insurance-like’ property of CSR activity. We posit that such activity leads to positive attributions from stakeholders, who then temper their negative judgments and sanctions toward firms because of this goodwill. We extend the risk management model by theorizing that some types of CSR activities will be more likely to create goodwill and offer insurance-like protection than other types. We delineate several firm and event specific characteristics that we expect to influence the link between CSR activities and an insurance effect. We then test our model using an event study of 178 negative legal/regulatory actions against firms throughout the 11 years from 1993–2003. We find that participation in institutional CSR activities—those aimed at a firm's secondary stakeholders or society at large—provides an ‘insurance-like’ benefit, while participation in technical CSRs—those activities targeting a firm's trading partners—yields no such benefits. We conclude by considering the implications of our findings for future theorizing and research into the economic value of CSR engagement. Copyright © 2008 John Wiley & Sons, Ltd.
2,025 citations
TL;DR: The authors developed a conceptual framework of the marketing-finance interface and discussed its implications for the theory and practice of marketing, and proposed that marketing is concern, concern, and concern.
Abstract: The authors develop a conceptual framework of the marketing–finance interface and discuss its implications for the theory and practice of marketing. The framework proposes that marketing is concern...
1,900 citations
TL;DR: In this article, the authors present evidence that some types of bidders systematically overpay in acquisitions, thereby reducing the wealth of their shareholders as opposed to just revealing bad news about their firm.
Abstract: In a sample of 326 US acquisitions between 1975 and 1987, three types of acquisitions have systematically lower and predominantly negative announcement period returns to bidding firms. The returns to bidding shareholders are lower when their firm diversifies, when it buys a rapidly growing target, and when its managers performed poorly before the acquisition. These results suggest that managerial objectives may drive acquisitions that reduce bidding firms' values. THERE IS NOW CONSIDERABLE evidence that making acquisitions is a mixed blessing for shareholders of acquiring companies. Average returns to bidding shareholders from making acquisitions are at best slightly positive, and significantly negative in some studies (Bradley, Desai and Kim 1988, Roll 1986). Some have suggested that negative bidder returns are purely a consequence of stock financing of acquisitions that leads to a release of adverse information about acquiring firms (Asquith, Bruner, and Mullins 1987). In this case, negative bidder returns are not evidence of a bad investment. An alternative interpretation of poor bidder performance is that bidding firms overpay for the targets they acquire. In this paper, we present evidence that some types of bidders systematically overpay. There are at least two reasons why bidding firms' managers might overpay in acquisitions, thereby truly reducing the wealth of their shareholders as opposed to just revealing bad news about their firm. According to Roll (1986), managers of bidding firms are infected by hubris, and so overpay for targets because they overestimate their own ability to run them. Another view of overpayment is that managers of bidding firms pursue personal objectives other than maximization of shareholder value. To the extent that acquisitions serve these objectives, managers of bidding firms are willing to pay more for targets than they are worth to bidding firms' shareholders. Our view is that when a firm makes an acquisition or any other investment, its manager considers both his personal benefits from the investment and the consequences for the market value of the firm. Some investments are particularly attractive from the former perspective: they contribute to long term growth of the firm, enable the manager to diversify the risk on his human capital, or
1,617 citations
TL;DR: In the past two decades, the ideology of shareholder value has become entrenched as a principle of corporate governance among companies based in the United States and Britain this article and has become prominent in the corporate governance debates in European nations such as Germany, France and Sweden.
Abstract: Over the past two decades the ideology of shareholder value has become entrenched as a principle of corporate governance among companies based in the United States and Britain. Over the past two or three years, the rhetoric of shareholder value has become prominent in the corporate governance debates in European nations such as Germany, France and Sweden. Within the past year, the arguments for ‘maximizing shareholder value’ have even achieved prominence in Japan. In 1999 the OECD issued a document, The OECD Principles of Corporate Governance, that emphasizes that corporations should be run, first and foremost, in the interests of shareholders (OECD, 1999)
1,533 citations