Evaluating corporate performance:a critique of economic value added

There has been a revival of interest in economic techniques to measure the value of a firm through the use of economic value added as a technique for measuring such value to shareholders. This technique, based upon the concept of economic value equating to total value, is founded upon the assumptions of classical liberal economic theory. Such techniques have been subject to criticism both from the point of view of the level of adjustment to published accounts needed to make the technique work and from the point of view of the validity of such techniques in actually measuring value in a meaningful context. This paper critiques economic value added techniques as a means of calculating changes in shareholder value, contrasting such techniques with more traditional techniques of measuring value added. It uses the company Severn Trent plc as an actual example in order to evaluate and contrast the techniques in action. The paper demonstrates discrepancies between the calculated results from using economic value added analysis and those reported using conventional accounting measures. It considers the merits of the respective techniques in explaining shareholder and managerial behaviour and the problems with using such techniques in considering the wider stakeholder concept of value. It concludes that this economic value added technique has merits when compared with traditional accounting measures of performance but that it does not provide the universal panacea claimed by its proponents.

Why do firms invest in consumer advertising with limited sales response? A shareholder perspective

Marketing managers increasingly recognize the need to measure and communicate the impact of their actions on shareholder returns. This study focuses on the shareholder value effects of pharmaceutical direct-to-consumer advertising (DTCA) and direct-to-physician (DTP) marketing efforts. Although DTCA has moderate effects on brand sales and market share, companies invest vast amounts of money in it. Relying on Kalman filtering, the authors develop a methodology to assess the effects from DTCA and DTP on three components of shareholder value: stock return, systematic risk, and idiosyncratic risk. Investors value DTCA positively because it leads to higher stock returns and lower systematic risk. Furthermore, DTCA increases idiosyncratic risk, which does not affect investors who maintain well-diversified portfolios. In contrast, DTP marketing has modest positive effects on stock returns and idiosyncratic risk. The outcomes indicate that evaluations of marketing expenditures should include a consideration of the effects of marketing on multiple stakeholders, not just the sales effects on consumers.

Bevezetés a lean menedzsmentbe – a lean stratégiai alapjai = Introduction to lean management – basic strategic elements of lean

A lean menedzsment az értékteremtő folyamatok stratégiai és operatív szintjének meghatározó formálójává vált az elmúlt évtizedekben. Jelen tanulmány stratégiai nézőpontból tárgyalja a lean menedzsment teljes bevezetését. Részletes áttekintést ad a Womack és Jones (2003) által lefektetett lean alapelvekről. Az operatív teljesítményjavulásból származó vevői értékteremtés mellett foglalkozik a tulajdonosi értékteremtéssel, az MRP és a lean szinergikus összekapcsolásával, valamint a lean ideális szervezeti környezetével is. A lean a kapcsolódó területek illesztését is megköveteli, a műhelytanulmány röviden kitér az emberi erőforrás, a teljesítménymérés, az ellátási lánc és a termékfejlesztés legfontosabb kérdéseire. = Lean management has become the dominant strategic and operative framework of value creating processes in the last decades. The working paper describes the strategic approach of full lean implementation. It is mainly built on Womack and Jones’s (2003) lean principles. Beside the five lean principles the study is concerned with customer and shareholder value creation, touches upon the relationship of lean and MRP, and describes ideal lean organizational environment. Lean redesigns value creating processes and requires functional fit of related departments, so the most important issues of human resource, performance, supply chain management and product design are discussed as well.

Liderazgo Responsable: Una revisión de la literatura

El objetivo del presente artículo es profundizar en los conceptos de liderazgo responsable y responsabilidad social empresarial, basándose en un marco referencial y bibliográfico pertinente para la investigación. Para ello, se realizó una exhaustiva búsqueda de referencias bibliográficas, tales como artículos científicos, publicaciones académicas y estudios de caso, que ayudaron a dar un acercamiento conceptual al tema principal. Se encontraron diferentes aproximaciones conceptuales sobre el liderazgo responsable y la importancia que tiene en términos de responsabilidad social, algunas teorías del liderazgo, estilos de liderazgo responsable, la satisfacción laboral y por ultimo una serie de casos empresariales que ponen estos conceptos en práctica.

Criando valor p??blico por meio de parcerias p??blico- privadas

O prop??sito deste trabalho ?? avan??ar em dire????o ao desenvolvimento de um marco anal??tico que ajude a avaliar as parcerias p??blico-privadas, tanto ?? luz do conceito geral, como de propostas espec??ficas concretas. Para isso, inicia-se o artigo com um breve caso para ilustrar o problema de modo geral e, em seguida, desenvolve-se um marco anal??tico para ajudar o setor p??blico a aprender como realizar suas responsabilidades de due diligence (checagem) de forma mais eficiente.

O futuro da liderança de topo na administração pública portuguesa. Forças motrizes e cenários possíveis.

Dissertação de mestrado em Administração Pública, orientada pelo Professor Doutor J. A. Oliveira Rocha apresentada na Escola de Economia e Gestão da Universidade do Minho, em 2006.

Corporate real estate strategies - a multinational approach

A Work Project, presented as part of the requirements for the Award of a Masters Degree in Management from the NOVA – School of Business and Economics

On trust, knowledge, sharing and innovation

Organisations continuously innovate, create, and are competitive if they improve their performance through continuous intellectual capital development, a key resource for value creation and organisational performance driver. Apart from sustaining competitive advantage, intellectual capital is increasingly important due to its ability to increase shareholder value, especially in public organisations. Employee learning, talent development, and knowledge creation allow the organisation to generate innovative ideas due to the quickness of knowledge obsolescence. The organisation's dynamic capabilities create and re-ignite organisational competencies for business sustainability being co-ordinated by well-structured organisational strategic routines ensuring continuous value creation streams into the business. This chapter focuses on the relationship between notions of knowledge sharing and trust in organisations. Lack of trust can impact negatively organisational knowledge sharing, dependent on trust, openness, and communication. The research sample included graduates and postgraduate students from two universities in Portugal. The findings revealed different perceptions according to the age group.

Stakeholder activism, managerial entrenchment, and the congruence of interests between shareholders and stakeholders

We argue that when stakeholder protection is left to the voluntary initiative of managers, concessions to social activists and pressure groups can turn into a self-entrenchment strategy for incumbent CEOs. Stakeholders other than shareholders thus benefit from corporate governance rules putting managers under a tough replacement threat. We show that a minimal amount of formal stakeholder protection, or the introduction of explicit covenants protecting stakeholder rights in the firm charter, may deprive CEOs of the alliance with powerful social activists, thus increasing managerial turnover and shareholder value. These results rationalize a recent trend whereby well-known social activists like Friends of the Earth and active shareholders like CalPERS are showing a growing support for each other's agendas.

Effect of investments on fundamentals and market reaction on pre-operational and operational Brazilian companies for the period 2006-2012

ABSTRACT This paper provides evidence on the market reaction to corporate investment decisions whose shareholder value is largely attributed to growth options. The exploratory research raised pre-operational companies and their operational pairs on the same economy segments. It had the purpose of investigating the existence of statistical differentiation from financial indicators that reflect the installed assets and growth assets, and then study the market reaction to changes in fixed assets as a signaling element about investment decisions. The formation process of operational assets and shareholder value almost exclusively dependent on asset growth stands out in the pre-operational companies. As a result, differentiation tests confirmed that the pre-operational companies had their value especially derived on growth options. The market reaction was particularly bigger in pre-operational companies with abnormal negative stock returns, while the operational companies had positive returns, which may indicate that the quality of the investment is judged based on the financial disclosure. Additionally, operational companies' investors await the disclosure to adjust their prices. We conclude that the results are consistent with the empirical evidence and the participants in financial markets to long-term capital formation investments should give that special attention.

Stakeholder Activism, Managerial Entrenchment, and the Congruence of Interests between Shareholders and Stakeholders

We argue that when stakeholder protection is left to the voluntary initiative of managers, concessions to social activists and pressure groups can turn into a self-entrenchment strategy for incumbent CEOs. Stakeholders other than shareholders thus benefit from corporate governance rules putting managers under a tough replacement threat. We show that a minimal amount of formal stakeholder protection, or the introduction of explicit covenants protecting stakeholder rights in the firm charter, may deprive CEOs of the alliance with powerful social activists, thus increasing managerial turnover and shareholder value. These results rationalize a recent trend whereby well-known social activists like Friends of the Earth and active shareholders like CalPERS are showing a growing support for each other s agendas.

Measuring intangibles' productivity. Empirical evidence from Spanish firms

As companies and shareholders begin to note the potential repercussions of intangible assets uponbusiness results, the inability of the traditional financial statement model to reflect these new waysof creating business value has become evident. Companies have widely adopted newmanagement tools, covering in this way the inability of the traditional financial statement model toreflect these new ways of creating business value.However, there are few prior studies measuring on a quantifiable manner the level of productivityunexplained in the financial statements. In this study, we measure the effect of intangible assets onproductivity using data from Spanish firms selected randomly by size and sector over a ten-yearperiod, from 1995 to 2004. Through a sample of more than 10,000 Spanish firms we analyse towhat extent labour productivity can be explained by physical capital deepening, by quantifiedintangible capital deepening and by firm s economic efficiency (or total factor productivity PTF).Our results confirm the hypothesis that PTF weigh has increased during the period studied,especially on those firms that have experienced a significant raise in quantified intangible capital,evidencing that there are some important complementary effects between capital investment andintangible resources in the explanation of productivity growth. These results have significantdifferences considering economic sector and firm s dimension.

Stakeholder activism, managerial entrenchment and the congruence of interests between shareholders and stakeholders

We argue that when stakeholder protection is left to the voluntaryinitiative of managers, concessions to social activists and pressuregroups can turn into a self-entrenchment strategy for incumbent CEOs.Stakeholders other than shareholders thus benefit from corporategovernance rules putting managers under a tough replacement threat. Weshow that a minimal amount of formal stakeholder protection, or the introduction of explicit covenants protecting stakeholder rights in thefirm charter, may deprive CEOs of the alliance with powerful socialactivists, thus increasing managerial turnover and shareholder value.These results rationalize a recent trend whereby well-known socialactivists like Friends of the Earth and active shareholders likeCalPERS are showing a growing support for each other s agendas.

Innovation Benchmark Study: Analysis of Innovation Processes in Finnish Companies

Liikevaihdon orgaaninen kasvu on ensisijainen tekijä ja haaste yritysjohdolle yrityksen omistaja-arvon kasvattamiseksi. Tutkimus tarkastelee suosivatko suomalaisyritykset pääasiallisesti olemassa olevaa liiketoimintaa palvelevia innovaatioita vai tukevatko nykyhetken toimintatavat myös uusia kasvua kiihdyttäviä radikaaleja innovaatioita. Lisäksi työ kartoitti suomalaisyritysten innovaatioprosessien kehitysalueita käyttäen itsearviointitutkimusta.Tulokset johtivat kolmeen johtopäätökseen. Tutkimus osoitti, että vastaajayritykset ovat keskittyneet innovaatiotoiminnassaan vahvasti ydinliiketoimintaansa, jättäen potentiaaliset kasvumahdollisuudet huomioimatta. Yritykset tavoittelevat maksimaalisia tuottoja keskittymällä tuotteidensa korkeaan suorituskykyyn. Lyhyen aikavälin epärealistiset tuotto-odotukset sekä projekteille suunnatut arviointikriteerit rajoittavat liiketoimintaa mullistavien radikaalien innovaatioiden kehittymistä organisaatiossa. Toiseksi, tutkimus osoitti, että suuri osa yrityksistä käyttää perinteisen projektien arviointi- ja kehitysprosessin lisäksi vaihtoehtoisia ja huonosti kontrolloitavissa olevia kehitysprosesseja, mikäli projektille annetaan kielteinen rahoituspäätös standardin prosessin sisällä. Kolmanneksi, suomalaisyritysten innovaatioprosesseissa paljastui merkittäviä puutteita mitattavien elementtien suhteen.