Creating Shareholder Value: A Guide for Managers and Investors [Hardcover]

Alfred Rapparport (Author)

Book Description

Publication Date: December 5, 1986

Increased annual sales and growth of earnings - these are the usual standards of success for the American corporation. But what does it mean if the company achieves its goals but the value of its stock declines at the same time? According to Rappaport, these companies are judging success by the wrong standards, and often become the target for takeovers. Rappaport argues that the ultimate test of corporate strategy, indeed the only reliable measure, is whether it creates economic value for shareholders.

Editorial Reviews

Amazon.com Review

Should a company's management be most accountable to employees, customers, or management itself? In Creating Shareholder Value, Alfred Rappaport argues that management's primary responsibility is to company shareholders. First published 12 years ago, the ideas put forth by Rappaport have since become commonplace in companies around the world.

Rappaport eschews the most common measures of a company's performance, such as price-to-earnings ratios ("Cash is a fact, profit is an opinion"), return on investment, and equity measures, instead concentrating on developing a shareholder value approach that measures "value drivers" such as sales-growth rates, operating profit margins, and cost of capital. This revised and updated edition addresses the issues of corporate downsizing and the social responsibilities of business. It also includes new sections on the value of mergers and acquisitions and how to implement a shareholder value system. Both managers and investors alike will find this book useful. --This text refers to an alternate Hardcover edition.

Review

Alan Shapiro Ivadelle and Theodore Johnson Professor of Banking and Finance, Graduate School of Business Administration, University of Southern California Al Rappaport lives up to his reputation as the father of shareholder value. This book is an invaluable resource for anyone committed to creating shareholder value or teaching about it. Creating Shareholder Value presents not just the basic principles and theoretical underpinnings of its subject matter but also their application through numerous well-chosen and up-to-date real-world examples.

Michael J. Mauboussin Managing Director, Equity Research, Credit Suisse First Boston Corporation Herein lie the power tools of any investor's toolbox. This significant update to the seminal Creating Shareholder Value offers investors and corporate managers a theoretically sound and practically usable guide for decision making. Business people who have been jostled by the latest management fads and buzzwords will find refuge in Rappaport's well-conceived and effective framework.

Harry M. Jansen Kraemer, Jr. President, Baxter International, Inc Dr. Rappaport does a phenomenal job of bridging the gap between shareholder value theory and practice. I highly recommend Creating Shareholder Value for CEOs, CFOs, business school students and anyone who wants to truly understand as well as create shareholder value.

Stephen F. Bollenbach President and CEO, Hilton Hotels Corporation Updates all of us on the front lines with the latest thinking about creating shareholder value—from the social aspects to the very specific. I recommend this book to any person seriously concerned about the function of a corporation in a market economy.

Martin L. Leibowitz, Vice Chairman and Chief Investment Officer, TIAA-CREF Rappaport's work shines a bright light on how to systematically apply fiancial theory to the pratical problems of corporate valuation. The distinction Rappaport makes between shareholder return and corporate return is particularly critical in today's markets. Every serious ananlyst should have a firm understanding of his writings.

Charles W. McCall President and CEO, HBO & Company I've had the pleasure of following Al Rappaport's work for over 20 years and I feel this is his best work ever. The insights on acquisitions and the work on performance measurements are very important for fast-growing companies. Al's principles have helped us grow from a market value of less than $100 million to over $7 billion in the past six years. --This text refers to an alternate Hardcover edition.

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Product Details

• Hardcover: 272 pages
• Publisher: Free Press (December 5, 1986)
• Language: English
• ISBN-10: 0029257204
• ISBN-13: 978-0029257203
• Product Dimensions: 9.3 x 6.2 x 1.2 inches
• Shipping Weight: 1.1 pounds
• Average Customer Review: 4.6 out of 5 stars  See all reviews (10 customer reviews)
• Amazon Best Sellers Rank: #3,267,883 in Books (See Top 100 in Books)

Customer Reviews

Most Helpful Customer Reviews

19 of 21 people found the following review helpful:

3.0 out of 5 stars Good explanation of creating shareholder value, but..., June 8, 1999

By A Customer

This review is from: Creating Shareholder Value: A Guide for Managers and Investors (Hardcover)

Professor Rappaport's revised version of his 1986 book on creating shareholder value provides a good description of the value based management concept that he helped create. However, many of the chapters are stand alone sections that do not flow well together. In some chapters he does not provide enough depth on how this book can actually be used by managers. In addition, the chapters on using his concepts to formulate value-maximizing business strategies was somewhat lacking.

Nevertheless, the book was an easy read and many of his points were right on target. I would also highly recommend interested readers to check out "The Value Imperative" by Marakon Associates and "Valuation" by McKinsey & Co for more information on value based management.

11 of 12 people found the following review helpful:

5.0 out of 5 stars Valuation Fundamentals, September 28, 2001

By 

E. Hengstmengel (alphen aan den rijn, - Netherlands) - See all my reviews
(REAL NAME)   

This review is from: Creating Shareholder Value: A Guide for Managers and Investors (Hardcover)

Given that investors value bonds by discounting future cash flows, it stands to reason that they value stocks in the same fashion. Alfred Rappaport is the founder of the shareholder value mindset which gained importance in the '80 and is widely accepted in this new millenium. Rappaport starts the book explaining that objections to using a discounted Cash Flow model do not hold. Strong arguments and empirical evidence is given to explain the market's valuation mechanism. What follows is a basic but thorough explanation of the 3 elements for valuing a company (cash flows , risk and the competitive advantage period). In the second part of the book, it will become clear for the reader DCF is closely linked to strategic analysis and is not in contradiction with stakeholder analysis, customer value analysis, Activity Based costing or any other tool. On the contrary, Rappaport shows DCF is a communication tool that helps investors understand a company's implied performance and how to (re)act. Together with the Valuation book from Copeland, Koller and Murrin this is the book you need.

4 of 4 people found the following review helpful:

4.0 out of 5 stars A good "HOW TO" think about Shareholdervalue" book., December 30, 1998

By A Customer

This review is from: Creating Shareholder Value: A Guide for Managers and Investors (Hardcover)

It would be nearly impossible to read such a book without finding some area of disagreement. However, as a means to provoke thought and gain a better understanding of the issue of shareholder value it does a fine job. The STRENGTH of the book is that it presents both concepts and content. This allows the reader to use the book as a touchstone when considering potential solutions for their particular area of interest and/or concern. The WEAKNESS of the book is that it tends to become academic and verbose (read boring) in the middle chapters.

On balance I recommend the book be read by anyone interested in the topic of shareholdervalue, EVA, etc. Pause to fully understand the good passages (particularly the concepts), and blow by the rest. It will most likely raise your level of thinking.