Euro Stoxx 50: 1997-2005 - Shareholder Value Creation in Europe

23 Pages Posted: 7 Apr 2006

See all articles by Pablo Fernandez

Pablo Fernandez

University of Navarra - IESE Business School

Jose M. Carabias

London School of Economics & Political Science (LSE) - Department of Economics

Julio Aznarez

University of Los Andes - ESE Business School

Óscar E. Carbonell López

Universidad Panamericana - Instituto Panamericano de Alta Dirección de Empresa (IPADE)

Date Written: April 3, 2006

Abstract

2005 was a very good year for the shareholders of the companies in the Euro Stoxx 50. The shareholder value creation of these 50 companies was €292.9 billion. The companies that created more value for their shareholders were Total (€30 billion), Sanofi-Synthelabo (€23.2 billion) and Eni (€20.7 billion). The companies that destroyed more value were Telecoms: Deutsche Telekom (-€14.8 billion), France Telecom (-€11.8 billion) and Telecom Italia (-€7.1 billion). In 2005, the Euro Stoxx 50 was a bit more volatile than the S&P 500.

Shareholder value creation in the three-year period 2003-2005 was €551 billion. The market value of the 50 companies included in the Euro Stoxx 50 was €2.1 trillion in 2005, although only €1.8 trillion were included in the index.

SAP was the top shareholder value creator and Deutsche Telekom the top shareholder value destroyer during the eight-year period 1997-2005.

A portfolio long in the companies that entered the index and short in the companies that abandoned the index had on average a 6.85% return in the 20 days prior to the index recomposition and a 0.97% return in the 20 days after the index recomposition.

Keywords: Shareholder value creation, created shareholder value, shareholder value added, shareholder return, required return to equity

JEL Classification: G12, G31, M21

Suggested Citation

Fernandez, Pablo and Carabias, Jose M. and Aznarez, Julio and Carbonell López, Óscar E., Euro Stoxx 50: 1997-2005 - Shareholder Value Creation in Europe (April 3, 2006). Available at SSRN: https://ssrn.com/abstract=895152 or http://dx.doi.org/10.2139/ssrn.895152

Pablo Fernandez (Contact Author)

University of Navarra - IESE Business School ( email )

Camino del Cerro del Aguila 3
28023 Madrid
Spain
+34 91 357 0809 (Phone)
+34 91 357 2913 (Fax)

HOME PAGE: http://web.iese.edu/PabloFernandez/

Jose M. Carabias

London School of Economics & Political Science (LSE) - Department of Economics ( email )

Houghton Street
London WC2A 2AE
United Kingdom

Julio Aznarez

University of Los Andes - ESE Business School ( email )

Av. Plaza 1905
Santiago
Chile
562) 412 9570 (Phone)

Óscar E. Carbonell López

Universidad Panamericana - Instituto Panamericano de Alta Dirección de Empresa (IPADE) ( email )

Floresta 20, Col. Clavería
Delegación Azcapotzalco 02080
Mexico
52 55 53 990083 (Phone)
52 55 53 99 7682 (Fax)

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