35 Pages Posted: 16 Jun 2016 Last revised: 30 Jun 2016
Date Written: June 14, 2016
Life-Cycle Reviews would improve management/board capital expenditure decisions and fundamentally upgrade investor communications. The key is a reality-based analysis of the firm's major business units grounded in the life-cycle framework. The focus is on why business-unit reinvestment should create value in the future. This PowerPoint presentation expands upon the ideas presented in my book, Value Creation Thinking. The book website, Value Creation Thinking dot com, contains a % Future scorecard for 1,000 U.S. industrial firms, updated quarterly. The % Future metric uses an estimate of the wind-down value of the firm's existing assets in order to derive the implied value of the firm's future investments, expressed as a percent of the total firm value. As part of a Life-Cycle Review, the % Future metric helps pinpoint, based on current stock prices, the market's assessment of the firm's position on the life cycle.
Keywords: value creation, corporate governance, board responsibilities, % Future, life cycle
JEL Classification: D21, D83, G30, G31, G34, L21, M41
Suggested Citation: Suggested Citation
Madden, Bartley J., Value Creation Thinking: Life-Cycle Reviews (Presentation Slides) (June 14, 2016). Available at SSRN: https://ssrn.com/abstract=2795782