If you take market value growth and add cash distributed to shareholders (via dividends or stock repurchases), you get total shareholder return (tsr), which is what most investors rely on as a measure of value creation What is sustained value creation Anybody can get lucky, at least for a while. Maximizing shareholder value is the dumbest idea in the world The only valid purpose of a firm is to create a customer Lynn stout's book, the shareholder value myth, is a comprehensive critique of the idea that corporations should prioritize shareholder value above all else
The book is divided into two parts Debunking the shareholder value myth and exploring what shareholders really value. It is not only necessary for corporations to create substantial shareholder value in order to attract new capital, but also to create shareholder value as efficiently as possible Another reason is that creating shareholder value is harder than most technical problems Many technical problems you encounter in the line of work are easy to solve In his final shareholder letter, jeff bezos explains a profoundly simple lesson most leaders overlook bezos explains why your goal should be to ‘create value,’ and how to do exactly that.
Here we explain how to create value and maximize it for shareholders, its advantages & disadvantages.
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