Shareholder Value
Shareholder value refers to the economic benefits that a company creates for its shareholders through its operational activities, strategic decisions, and financial management. It encompasses not only the direct returns shareholders receive through dividends and stock price appreciation but also the accumulation of intangible assets over the long term, such as brand value, market share, and technological advantages. Maximizing shareholder value is often seen as the primary objective of a company's management, as it directly pertains to the growth of shareholders' wealth and investment returns.
Definition: Shareholder value refers to the economic benefits created for shareholders by a company through its business activities, strategic decisions, and financial management. It includes not only the direct returns shareholders receive through dividends and stock price appreciation but also the intangible assets accumulated by the company over the long term, such as brand value, market share, and technological advantages. Maximizing shareholder value is often seen as the primary goal of a company's management, as it directly relates to the growth of shareholders' wealth and investment returns.
Origin: The concept of shareholder value originated in the 1970s when economists and management scholars began to emphasize that companies should focus on shareholder interests. In 1976, Michael Jensen and William Meckling introduced the theory of shareholder value maximization in their paper
