Medtronic's Chairman William George on how mission-driven companies create long-term shareholder value

2001 ◽  
Vol 15 (4) ◽  
pp. 39-47 ◽  
Author(s):  
William W. George
Keyword(s):  
Shareholder Value

scholarly journals EVALUATION OF FINANCIAL PERFORMANCE USING VALUE ADDITION METRICS – A SELECT STUDY OF 'IT' COMPANIES IN INDIA

2017 ◽  
Vol 4 (37) ◽  
Author(s):  
S. PRATAP ◽  
J. REVATHY
Keyword(s):  
Shareholder Value ◽  
Economic Value ◽  
Value Added ◽  
Wealth Creation ◽  
Shareholder Returns ◽  
Accounting Data ◽  
Earnings Per Share ◽  
Market Value Added ◽  
Evaluation Techniques

In today’s competitive world, value and wealth creation for shareholders are among the most important goals of businesses. For the sake of achieving his goals, the investor needs some instruments in order to measure the potential value of each investment opportunity. It is clear that these instruments are not capable of predicting the exact future, they just provide some piece of information and advice that help the investor in the decisions he makes. Among these criteria, the most common types are Return on Investment (ROI) and Earnings per Share (EPS). Despite the numerous applications of these instruments, theoretically, they are not related with shareholders’ value or wealth creation. In recent years, the modern evaluation techniques based on economic theories such as Economic Value Added (EVA), Market Value Added (MVA) and Shareholder Value Added (SVA) replace the accounting data-based criteria and have widely drawn the attentions. These criteria follow the performance assessment with regard to the changes in the value and alongside maximizing the long term shareholder returns. In this research paper, one of the most important criteria; i.e. Shareholder Value Added (SVA), is investigated from several viewpoints.

The procurement dilemma: short-term savings or long-term shareholder value?

2016 ◽  
Vol 37 (6) ◽  
pp. 10-17 ◽  
Author(s):  
Michel Philippart
Keyword(s):  
Corporate Strategy ◽  
Reference Group ◽  
Shareholder Value ◽  
Potential Contribution ◽  
Competitive Advantages ◽  
Short Term ◽  
Content Type ◽  
Functional Perspective ◽  
The Impact

Purpose Research has shown the potential contribution of properly managed suppliers to the competitive position of firms. Major strategy schools of thought such as the industry view and the resource-based view have evolved in their perspective about supplier’s contributions, replacing a transactional perspective of supplier management with a more comprehensive view of their role in corporate strategy. This study aims to understand if procurement professionals have evolved in the same direction. Design/methodology/approach During a corporate wide assessment for a large consumer product corporation, the author had the opportunity to incorporate a four-statement question aimed at identifying the perception of value creation by different levels of procurement staff. The answers were compared with responses of a reference group that comprised business school students who had never been exposed to professional procurement as a function or skill. Findings The results show that buyers, even at senior levels, more clearly identify value as the result of price negotiation, a functional perspective, than as the construction of sustainable competitive advantages, the shareholder perspective. They do not discriminate sufficiently between short-term transactional value transfer and long-term shareholder value capture. Research limitations/implications The study was conducted on a sample of 500 people from four continents but limited to a single corporate environment. This study focused on innovation as a source of value and competitive advantages. Originality/value The paper shows to corporate deciders the impact of overly cost-focused procurement departments. This study reinforces their need to better balance the objectives assigned to their procurement team. This study outlines the steps necessary to align the cultural competitiveness of procurement to the objectives of the firm, with an extended enterprise scope.

Firm web visibility and its business value

2014 ◽  
Vol 24 (3) ◽  
pp. 292-312 ◽  
Author(s):  
Fang Wang ◽  
Liwen Vaughan
Keyword(s):  
Significant Relationship ◽  
Firm Value ◽  
Shareholder Value ◽  
Convincing Evidence ◽  
Business Value ◽  
Cross Sectional ◽  
Content Type ◽  
Web Visibility ◽  
Advertising Efficiency

Purpose – The purpose of this paper is to theoretically analyze and empirically test the business value of firm web visibility, including its relationship to advertising efficiency and long-term financial performance (i.e. shareholder value). Design/methodology/approach – A conceptual framework is established to analyze firm value of web visibility through its market effects. Hypotheses on the associations between firm web visibility and advertising efficiency and shareholder value are tested by cross-sectional analysis of 1,331 firms in six industries and four industry sectors. The authors control for several firm- and industry-level factors. Findings – The results consistently support the two hypotheses, i.e., first, a positive and significant relationship between firm web visibility and advertising efficiency; and second, a positive and significant relationship between firm web visibility and shareholder value. Practical implications – In addition to increasing web traffic, firm web visibility has business value and helps to enhance advertising efficiency and shareholder value. Managers can use the web references as a valuable tool for marketing success when the use of traditional advertising reaches saturation. Managers should actively monitor and use web visibility as a web management measure in practice. Originality/value – This research provides convincing evidence to support both short-term and long-term business value of web visibility and suggests that web visibility be recognized and managed as a market-based asset.

scholarly journals The legitimacy of corporate social responsibility

2007 ◽  
Vol 4 (4) ◽  
pp. 80-88 ◽  
Author(s):  
Rebecca Stratling
Keyword(s):  
Shareholder Value ◽  
Annual Reports ◽  
Potential Contribution ◽  
Legitimacy Theory ◽  
Critical View ◽  
Strategic Approach ◽  
The One ◽  
Corporate Social ◽  
Energy Companies

Based on deliberations on the legitimacy of CSR from the perspective of stakeholder and legitimacy theory on the one hand and the more critical view of Milton Friedman and Michael Jenson on the other hand, this paper analyses how major energy companies legitimise their CSR activities in their Annual Reports and their CSR reports. The research indicates that managers recognise the potential contribution of CSR to long-term financial performance of firms as well as the need to socially legitimise the firm’s operations. A surprisingly limited number of the companies in the sample take a very explicit strategic approach to CSR by stressing long-term shareholder value maximisation. The CSR policies therefore appear not to focus solely on a strategic stakeholder approach geared towards maximising shareholder value but to reflect considerations raised by legitimacy theory

scholarly journals Contested Visions: The Value of Systems Theory for Corporate Law

2017 ◽  
Author(s):  
Tamara Belinfanti ◽  
Lynn Stout
Keyword(s):  
Systems Theory ◽  
Environmental Science ◽  
Dominant Role ◽  
Shareholder Value ◽  
Corporate Law ◽  
Quarter Century ◽  
Citizens United ◽  
And Performance ◽  
The Many

Despite the dominant role corporations play in our economy, culture, and politics, the nature and purpose of corporations remains hotly contested. This conflict was brought to the fore in the recent Supreme Court opinions in Citizens United and Hobby Lobby. Although the prevailing narrative for the past quarter-century has been that corporations “belong” to shareholders and should pursue “shareholder value,” support for this approach, which has been justified as essential for managerial accountability, is eroding. It persists today primarily in the form of the argument that corporations should seek “long-term” shareholder value. Yet, as this Article shows, when shareholder value is interpreted to mean “long-term” shareholder value, it no longer offers the sought-after managerial accountability.What can? This Article argues that systems theory offers an answer. Systems theory is a well-developed design and performance measuring methodology routinely applied in fields such as engineering, biology, computer science, and environmental science. It provides an approach to understanding the nature and purpose of corporate entities that is not only consistent with elements of the many otherwise-conflicting visions of the corporation that have been developed, but also with important and otherwise difficult-to-explain features of corporate law and practice. It offers proven methods for measuring corporate performance that recognize the possibility of multiple goals and the importance of sustainability. And it cautions that, by ignoring the lessons of systems theory, shareholder value thinking may have encouraged regulatory and policy interventions into corporate governance that are not only ineffective, but destructive.

scholarly journals Does mandatory CSR provide long-term benefits to shareholders?

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Juniarti Juniarti
Keyword(s):  
Developing Countries ◽  
Empirical Evidence ◽  
Stock Exchange ◽  
Shareholder Value ◽  
Content Type ◽  
Accounting Measurement ◽  
Annual Reporting ◽  
Shareholder Benefit ◽  
Term Benefit

Purpose Mandatory corporate social responsibility (CSR) aims to protect the long-term benefit of shareholders; therefore, this study aims to seek empirical evidence for the benefit of mandatory CSR from the perspective of shareholders. Design/methodology/approach Consistent with the objective of this study, the long-term shareholder benefit is measured using the sustainability perspective. Companies listed on the Indonesia Stock Exchange that have at least five years of CSR implementation, as its mandate and have retroactive earnings data for minimum six years before the observation year are selected as the study’s sample. Findings The findings support that mandated CSR protects long-term shareholder value; there is a significant association between CSR and sustainable shareholder value. Industry profiles are an essential aspect of the association model. The results are robust through testing the association for various scenarios of time. Research limitations/implications This study uses a single measurement of shareholder value based only on accounting measurement. Further, due to limitations in accessing internal company data, this study relies on annual reporting information to measure CSR implementation. Originality/value This study is the first to provide empirical evidence of the long-term benefit of mandatory CSR from the shareholders' perspective. This study also contributes to the existing literature by evaluating the success of mandatory CSR in developing countries. Those that successfully implemented mandatory CSR can serve as a model for other developing countries interested in creating similar policies to encourage socially responsible companies.

The shifting sands above the oil: commercial and legal tools to manage political risk in emerging markets

2014 ◽  
Vol 54 (2) ◽  
pp. 530
Author(s):  
Christopher Flynn
Keyword(s):  
Emerging Markets ◽  
Joint Ventures ◽  
Energy Security ◽  
Shareholder Value ◽  
Political Risk ◽  
Resource Nationalism ◽  
Strategic Approach ◽  
Made In

An increasing number of Australian resources companies are investing in emerging markets, particularly in Africa. Managing an investment in these countries, and the joint ventures invariably formed in them, is an important part of improving shareholder value, raising capital, and managing political risk. These countries typically take a strategic approach to energy security and resource nationalism rather than the more market-focused approach of western states and companies. While the key risk is expropriation, political risk also presents itself in many other ways. During the long term, an investor needs to minimise the likelihood that it becomes cheaper for a government to breach its obligations to the company than it is to comply with them. Doing that requires several important interrelated protections (both legal and commercial) to minimise political risk and ensure that if expropriation does occur, the investor has maximised its chances of recovering its losses. A range of commercial and legal tools—deployable inside and outside of a country—are available to structure these investments, support operations, and minimise political risk in emerging markets. Drawing on his experience advising on energy and resources projects and transactions in more than 50 countries, author Chris Flynn outlines key legal protections to be sought in any contracts with respect to investments made in these countries. He also discusses useful commercial tools to help align the interests of the company, its local partners, and government.

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