Pursuit of shareholder value distorted company strategy

It has been strongly emphasized that the fundamental goal of all statementation is to maximize shareholder value, as the focus of business argument now changed from giant firm in product marketplace to giant firm facing the capital market. Especially, since the 1990s, there was a significant increasing demand from top companies for shareholder value, and shareholder value was subsequently used in Britain and USA as a management justification for the corporate restructuring and downsizing which promised to feature increased rates of return. There are some reasons that the demands and pressures of the US and UK capital markets were more urgent to maximize shareholder value. Firstly, the US and UK markets were much larger in terms of market capitalization relative to GDP, meaning that it is no longer that productivity is a key to success. Second, in both the UK and USA, there was a square away shift in ownership from direct ownership (households) to institutions, such(prenominal) as pensions and insurance coin. This is because such institutions were allowed to invest on fall market since 1980, and more people invest into pension funds to wreak higher and better return rather than putting money into the bank with the relatively low interests. These institutions own 60% of shares in UK and they act as an agent for people and achieved a lot of power to influence company.

In this essay, I am vent to highlight the importance of shareholder value and reveal the involve for a more reliable measurement system rather than traditional measurement such as discounted cash flow. after that, moving on to the facts of strategies that can be applied into the companies in order to maximize shareholder value and analyze problems occurring on the process of practicing those strategies with some examples such as Glaxo-Wellcome, GEC and BT.

Shareholder...

If you want to get a full essay, order it on our website: Orderessay



If you want to get a full essay, wisit our page: write my essay .