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Shareholder Value Maximization: What Managers Say and What They Do

37 Pages Posted: 30 Oct 2002  

Petra Joerg

University of Berne - Institute for Financial Management

Claudio F. Loderer

University of Berne - Institute for Financial Management; European Corporate Governance Institute (ECGI)

Lukas Roth

University of Alberta - Department of Finance and Statistical Analysis

Date Written: August 14, 2003

Abstract

This paper examines whether Swiss firms maximize shareholder value. To find out, we survey the goals of 313 listed and unlisted firms. We then examine whether managers' decisions are consistent with their goals and analyze whether performance corresponds to intentions. Our results show that most managers pursue conflicting targets. Moreover, they mention maximization of shareholder value only about half of the time. And when they do, it is often because share prices have fallen. Shareholder-value maximizing managers sometimes rely on inconsistent investment criteria. We also find that share-price performance is marginally better when managers claim to maximize shareholder value, particularly after a stock price decline.

Keywords: Shareholder value, Stakeholder value, Managerial targets, Performance

JEL Classification: G30, L21, M14

Suggested Citation

Joerg, Petra and Loderer, Claudio F. and Roth, Lukas, Shareholder Value Maximization: What Managers Say and What They Do (August 14, 2003). Available at SSRN: https://ssrn.com/abstract=337140 or http://dx.doi.org/10.2139/ssrn.337140

Petra Joerg

University of Berne - Institute for Financial Management ( email )

Engehaldenstrasse 4
Bern, CH-3012
Switzerland

Claudio F. Loderer (Contact Author)

University of Berne - Institute for Financial Management ( email )

Engehaldenstrasse 4
Bern, CH-3012
Switzerland
+41 31 631 37 75 (Phone)
+41 31 631 84 21 (Fax)

European Corporate Governance Institute (ECGI) ( email )

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

Lukas Roth

University of Alberta - Department of Finance and Statistical Analysis ( email )

2-32E Business Building
Edmonton, Alberta T6G 2R6
Canada
780-492-4431 (Phone)
780-492-3325 (Fax)

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