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Shareholder Value Creation (shareholder + value_creation)

Distribution by Scientific Domains
Business, Economics, Finance and Accounting100%

Selected Abstracts

STRATEGY AND SHAREHOLDER VALUE CREATION: THE REAL OPTIONS FRONTIER

JOURNAL OF APPLIED CORPORATE FINANCE, Issue 2 2000
Martha Amram
The current interest in real options reflects the dramatic increase in the uncertainty of the business environment. Viewed narrowly, the real options approach is the extension of financial option pricing models to the valuation of options on real (that is, nonfinancial) assets. More broadly, the real options approach is a way of thinking that helps managers formulate their strategic options,the future opportunities that are created by today's investments,while considering their likely effect on shareholder value. But if the real options framework promises to link strategy more closely to shareholder value creation, there are some major challenges on the frontier of application. In the first part of this paper, the authors tackle the question, "What is really new about real options, and how does the approach differ from other wellestablished ways to make strategic decisions under uncertainty?" This article provides a specific definition of real options that relies on the ability to track marketpriced risk. Using examples from oil exploration and pharmaceutical drug development, the authors also show how specific features of the industry and the application itself determine the usefulness of the real options approach. The second part of the paper addresses the question: Given the many differences between real and financial options, how should a real options application be framed? The authors examine the use of real options in the valuation of Internet companies to demonstrate the required judgment and tradeoffs in the framing of real options applications. The case of Webvan, an online grocer, is used to illustrate the inter-action between strategy, execution, and valuation. [source]

Revisiting Shareholder Value Creation via International Joint Ventures: Examining Interactions Among Firm- and Context-Specific Variables

CANADIAN JOURNAL OF ADMINISTRATIVE SCIENCES, Issue 2 2004
Hemant Merchant
This study attempts to empirically reconcile the prevalent mixed findings regarding reactions of capital markets to announcements of American firms' participation in international joint ventures (IJVs). It does so by first admitting salient contextual variables into the portfolio of firm-specific variables,heretofore mostly considered in isolation,and then modeling their collective impact on these parents' shareholder value. A cluster analysis of more than 700 equity IJVs yields findings that highlight important interactions between the two sets of variables, which better inform creation and destruction of shareholder value for IJV parents. These findings facilitate development of a conceptual framework for assessing how parents can exploit the inter-connectedness between their firm-specific and contextual domains. Thus, this study lays a foundation for generating more refined predictions about shareholder value creation via IJVs. Résumé La présente étude essaie de concilier, de façon empirique, les conclusions contradictoires, révélées par l'étude des réactions des marchés de capitaux aux annonces par les firmes américaines de leur participation aux coentreprises internationales. Elle y parvient en deux temps: premièrement, par la reconnaissance des variables contextuelles fondamentales, jusque-là surtout considérées de façon isolée, dans le portfolio des variables spécifiques aux firmes; deuxièmement, par la modélisation de leur impact collectif sur la création des valeurs pour les actionnaires des firmes impliquées dans ces coentreprises. Les conclusions tirées de l'analyse par segments de plus de 700 coentreprises boursières internationales mettent en évidence d'importantes interactions (entre les deux groupes de variables) dans la création et la destruction des valeurs pour les actionnaires des coentreprises internationales. De façon incidente, les conclusions de l'étude tracent les contours d'un cadre conceptuel permettant de montrer comment les partenaires peuvent exploiter l'interrelation entre leurs secteurs spécifiques et les domaines contextuels. En somme, l'étude jette les bases d'une meilleure capacité de prédiction dans la création des valeurs par les actionnaires, via les coentreprises internationales. [source]

STRATEGY AND SHAREHOLDER VALUE CREATION: THE REAL OPTIONS FRONTIER

JOURNAL OF APPLIED CORPORATE FINANCE, Issue 2 2000
Martha Amram
The current interest in real options reflects the dramatic increase in the uncertainty of the business environment. Viewed narrowly, the real options approach is the extension of financial option pricing models to the valuation of options on real (that is, nonfinancial) assets. More broadly, the real options approach is a way of thinking that helps managers formulate their strategic options,the future opportunities that are created by today's investments,while considering their likely effect on shareholder value. But if the real options framework promises to link strategy more closely to shareholder value creation, there are some major challenges on the frontier of application. In the first part of this paper, the authors tackle the question, "What is really new about real options, and how does the approach differ from other wellestablished ways to make strategic decisions under uncertainty?" This article provides a specific definition of real options that relies on the ability to track marketpriced risk. Using examples from oil exploration and pharmaceutical drug development, the authors also show how specific features of the industry and the application itself determine the usefulness of the real options approach. The second part of the paper addresses the question: Given the many differences between real and financial options, how should a real options application be framed? The authors examine the use of real options in the valuation of Internet companies to demonstrate the required judgment and tradeoffs in the framing of real options applications. The case of Webvan, an online grocer, is used to illustrate the inter-action between strategy, execution, and valuation. [source]

Revisiting Shareholder Value Creation via International Joint Ventures: Examining Interactions Among Firm- and Context-Specific Variables

CANADIAN JOURNAL OF ADMINISTRATIVE SCIENCES, Issue 2 2004
Hemant Merchant
This study attempts to empirically reconcile the prevalent mixed findings regarding reactions of capital markets to announcements of American firms' participation in international joint ventures (IJVs). It does so by first admitting salient contextual variables into the portfolio of firm-specific variables,heretofore mostly considered in isolation,and then modeling their collective impact on these parents' shareholder value. A cluster analysis of more than 700 equity IJVs yields findings that highlight important interactions between the two sets of variables, which better inform creation and destruction of shareholder value for IJV parents. These findings facilitate development of a conceptual framework for assessing how parents can exploit the inter-connectedness between their firm-specific and contextual domains. Thus, this study lays a foundation for generating more refined predictions about shareholder value creation via IJVs. Résumé La présente étude essaie de concilier, de façon empirique, les conclusions contradictoires, révélées par l'étude des réactions des marchés de capitaux aux annonces par les firmes américaines de leur participation aux coentreprises internationales. Elle y parvient en deux temps: premièrement, par la reconnaissance des variables contextuelles fondamentales, jusque-là surtout considérées de façon isolée, dans le portfolio des variables spécifiques aux firmes; deuxièmement, par la modélisation de leur impact collectif sur la création des valeurs pour les actionnaires des firmes impliquées dans ces coentreprises. Les conclusions tirées de l'analyse par segments de plus de 700 coentreprises boursières internationales mettent en évidence d'importantes interactions (entre les deux groupes de variables) dans la création et la destruction des valeurs pour les actionnaires des coentreprises internationales. De façon incidente, les conclusions de l'étude tracent les contours d'un cadre conceptuel permettant de montrer comment les partenaires peuvent exploiter l'interrelation entre leurs secteurs spécifiques et les domaines contextuels. En somme, l'étude jette les bases d'une meilleure capacité de prédiction dans la création des valeurs par les actionnaires, via les coentreprises internationales. [source]