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.
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 valuefrom 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.