Question

What are ways to maximize shareholder value through long-term and short-term financial planning and the implementation of various strategies?

Answer 1

•   Maximizing shareholder value is the idea that firms should operate in a manner in which shares will reflect higher expected future value. Basically business should be fun to make their business as attractive as possible to current and future potential shareholders.
•   Share price and Business operations are not the same thing, so the Business should be run to maximize the value of firm and if the firm builds value then the share price should reflect this.
•   Companies do lots of things in the course of creating value, but at the end of the day a sustainable firm is in the business of generating profits. So while there are many tangible things a corporation can do to create value the creation of profit and sustainable underlying business is the essential component of creating shareholders value.
•   Companies maximize profits by selling goods and services then you will likely earn high profits and value of shareholders. So, we should be clear that maximizing shareholder value is primary in the long term sense of Business viability, logically equivalent to maximizing value to customers.
•   Few Basic governance principles for shareholders value creation that collectively will help company with sound, well executed business model to better realize it’s potential for creating shareholders value. These are:-

A.   Don’t manage earnings or provide earning guidance
B.   Make strategic decisions that maximize expected value, even at the expense of lower near earnings
C.   Make acquisition that maximize expected value, even at the expense of lowering near term earning
D.   Carry only assets that maximize value
E.   Return cash to shareholders when there are no credible value.
F.   Reward CEOs and other senior executives for delivering superior long term return
G.   Provide investors with value relevant information.