Shareholder value is one of the possible answers to the question of corporate governance, which, in essence is the policy of a business – „In whose interest should a business be managed, in case ownership and management are not combined anymore in the hands of the same people? “ The answer here is: in the interest of the shareholders! This goes hand in hand with the notion, that the purpose of a business is to gain value and to generate the highest possible profit for its shareholders (value creation approach).
Note! The shareholder value approach, especially because it places so much emphasis on the financial aspects of a business, is focused on short-term performance. The shareholder value approach ensures that businesses are focused on financial markets and not on their customers.« Back to Glossary Index