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This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License
Article
A New Approach for Measuring Shareholder Value Creation
Author(s)
Eleftherios Aggelopoulos, Dimitris Grypeos
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DOI:10.17265/1548-6583/2016.07.004
Affiliation(s)
ABSTRACT
This paper introduces a new approach for measuring shareholder value creation (called adjusted economic profit (EP)) which combines the advantages of both EP and APV (adjusted present value) methods. In particular, the shareholder value creation over a period is derived as the sum of two components: the EP relating purely to the operations of the company and the EP generated each period due to the tax benefit that arises from debt financing. We consider our results to be important for analysts and decision makers involved in appraising business performance or making investment decisions and HR professionals as well.
KEYWORDS
value creation, performance measurement, business valuation, residual income (RI) approaches, economic profit (EP), adjusted present value (APV)
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