In addition to financial results, what other variables impact shareholder value and why?

Expert Solution

There are different factors which are affecting the value of shareholder. Mny factors can make an impact on share holders value. Lets discuss about these factors. A company’s shareholder value depends on the best decisions made by its board of directors, including the ability to make wise investments and generate a good and impressive return on the investment. So there should be a good return for the money invested. So if the investment is in a good portfolio or the share price of the company is incresed the it leads to higher dividend and the higher value to the shareholder. If the shareholders value is increased then it will lead to the increase in number of shareholder. Which means more investors are willing to invest in the particular company.

Actually the company has no responsibility to increase the wealth of the shareholder and there is actually no legal duty to maximize profits in the management of a corporation. But Increasing the shareholder value is of prime importance for the management of a company. So the management must have the interests of shareholders in mind while making decisions. The higher the shareholder value, the better it is for the company and management.

Apart from the financial results there are some more factors will affects the share holder. That are listed below for better understanding.

1. Mnagerial remuneration

2. Dividend policy

3. Capital structure

4. Buyback of shares.

5. Economic conditions

These are some factors which are affecting the shareholder value. There should be a good managerial remuneration and dividend policy in the company. Good dividend policy indicates that the companies stocks are performing well in the market. It will leads to the value addition to the shareholder. Companies capital structure is also another important thing. It denoted the debt obligations of the company and it talks about the leverage of the company. Mcro economic conditions is another factor. It is about how the firm respond against the economic condition. These are the other factors which are affecting the value of shares.

ThankYou.....

jeff jeffy answered 1 year ago

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