Proven Ways to Increase Share Value

Journal of Applied Finance, Vol. 12, Iss. 1, Spring/Summer

Posted: 7 May 2002

See all articles by Andrew H. Chen

Andrew H. Chen

affiliation not provided to SSRN

James A. Conover

University of North Texas - Department of Finance (FIREL)

John Kensinger

University of North Texas - Department of Finance, Insurance Real Estate and Law

Abstract

Value based incentive systems could be improved if they explicitly reward management actions that create or enhance the firm's real options. Such systems often focus exclusively upon cash flows relative to resource investment; yet, share values are often substantially greater than the amount that could be justified by expected cash flows from existing operations. Since 1980, a wealth of evidence has grown that reveals several proven ways to increase share value. Indeed, the majority of share value may, in some firms, derive from the present value of growth opportunities or other real options that enhance value by reducing risk or adding flexibility. So, incentive systems must overcome the inherent conflict of interest between owners and managers by motivating all of the proven paths to increase value for shareholders.

JEL Classification: G10, G13

Suggested Citation

Chen, Andrew H. and Conover, James A. and Kensinger, John W., Proven Ways to Increase Share Value. Journal of Applied Finance, Vol. 12, Iss. 1, Spring/Summer, Available at SSRN: https://ssrn.com/abstract=306747

Andrew H. Chen (Contact Author)

affiliation not provided to SSRN

James A. Conover

University of North Texas - Department of Finance (FIREL) ( email )

FIREL Department
Denton, TX 76203-5339
United States
940-565-3061 (Phone)

John W. Kensinger

University of North Texas - Department of Finance, Insurance Real Estate and Law ( email )

Denton, TX 76203
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
2,255
PlumX Metrics