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The Economic Situation

In: Business and Management

Submitted By ziamanik
Words 357
Pages 2
The economic situation is fluid and dynamic. We may have a rapid recovery, which would be great, but, we might have a long, deep, and painful recession. We plan to use the Internet in the years ahead, while the book is in use, to update the situation on a chapter-by-chapter basis. As events related to the different chapters occur, we will provide updated vignettes and other information on the book' web site. We anticipate many important developments, hence a lot of updates. Still, the good news is that the basic, fundamental contents of the book will remain the s IS SHAREHOLDER WEALTH MAXIMIZATION A WORLDWIDE GOAL?
Most academics agree that shareholder wealth maximization should be a firm’s primary goal, but it’s not clear that people elsewhere really know how to implement it.
PricewaterhouseCoopers (PWC), a global consulting firm, conducted a survey of 82 Singapore companies to test their understanding and implementation of shareholder value concepts. Ninety percent of the respondents said their firm’s primary goal was to enhance shareholder value, but only 44% had taken steps to achieve this goal.
Moreover, almost half of the respondents who had shareholder value programs in place said they were dissatisfied with the results achieved thus far. Even so, respondents who focused on shareholder value were more likely to believe that their stock was fairly valued than those with other focuses, and 50% of those without a specific program said they wanted to learn more and would probably adopt the goal of shareholder wealth maximization eventually.
The study found that firms measure performance primarily with accounting-based measures such as the return on assets, equity, or invested capital. These measures are easy to understand and thus to implement, even though they are not the best conceptually. When compensation was tied to shareholder value, this was only for mid-level managers and above.
It is unclear how closely these results correspond to
U.S. firms, but firms in the United States and Singapore would certainly agree on one thing: It is easier to set the goal of shareholder wealth maximization than it is to figure out how to achieve it.

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