Chapter 2. Shareholder value maximization

Introduction

Over the past two decades, the global capital market has experienced revolutionary developments in information technology and the proliferation of information that have intensified global competition, thus increasing pressure on the CEO to strengthen shareholder value. Creating shareholder value depends on bringing about a positive pattern of cash-flows in excess of investor expectations. In order to achieve this, many leading companies have linked corporate strategy directly to value, and changed management compensation to value creation.

We can classify management decisions ...

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