Creating Shareholder Value

"The critical role of the shareholder value approach in allocating resources in a market-based economy is far from universally accepted."

"Earnings growth does not necessarily lead to the creation of economic value for shareholders."

"There is no unique formula for residual value. Its value depends on a careful assessment of the competitive position of the business at the end of the forecast period."

"Successful planning requires sound analysis for both formulating business strategies as well as for valuing strategies."

"When the stock market prices a company's shares according to a belief that the company will be able to create value over the long term, it is attributing to the company's long-term productivity or, equivalently, a sustainable competitive advantage."

"The basic inputs into the strategy valuation process, alternative strategies for gaining competitive advantage, are a direct outgrowth of the strategy formulation process."

"Management's objective should be to maximize long-term value for continuing shareholders."

"CEOs are beginning to realize that it is much more productive to understand what the stock price is signaling about market expectations than to debate the shortcomings of the stock market."

"A central tenet of an effective shareholder value system is that short-term performance measures be consistent with those established in the long-term, value-maximizing planning process."

"Shareholders will earn competitive returns only when the threshold standard is exceeded."

"The basic objective of making acquisitions is identical to any other investment associated with a company's overall strategy, namely, to add value."

"To create value, the present value of synergies must be greater than the premium paid."

"The commitment to devote substantial organizational resources should be preceded by a confident understanding of shareholder value implementation objectives and expected outcomes."

"CEOs recognize that the best ideas without an organization willing and able to implement them are largely worthless."

"The strategy formulation process generates hypotheses about optimal strategies for businesses."

"The role of performance measurement and incentive compensation in strengthening the shareholder value focus is critical."