Value-Based Management: Performance Indicators of Value Creation. Alternative Measures to Assess Shareholder Returns.

Abstract

How much is a company worth? Before buying a firm's shares, investors want to know if they are making a good investment choice. They want to understand the true value of the company. At the same time, current corporate owners want to gain from their investment because they take a risk by committing their money to the firm. In order to pursue this goal and satisfy the stockholders' needs, the company's management must use corporate fundings to undertake strategic investments that will generate future positive cash in-flows and design corporate strategies able to maximise value creation in the long term. Over the years, scholars developed many financial indicators to help managers, but which is the one that precisely computes the shareholder value created? This thesis analyses the most significant evolutions in business management, which led to the development of the Value-Based Management approach. Moreover, it tries to answer this question through theoretical and empirical research analyses by comparing alternative performance metrics.