Telepizza and Boston Chicken: Examples of Value Destruction

Abstract:     
Between December 1996 and October 1998, the value destroyed by Boston Chicken for its shareholders amounted to 3,293 million euros (a return of -100%). During the same period, the stock market yield (S&P500) was 54%.

Between June 1998 and October 1999, the value destroyed by TelePizza for its shareholders amounted to 1,543 million euros (a return of -55%). During the same period, the stock market yield (IBEX 35) was -7%.

It is very interesting to compare and try to differentiate what happened to these two companies. We also urge the reader to analyze the history of companies such as Levitz, Home Shopping Network, OM Scott, MCI, and LTCM.

Note: Downloadable document is in Spanish.

Keywords: Value creation, company valuation, value destruction, analysts

JEL Classifications: G12, G31, G32

Working Paper Series