Ten Ways To Create Sharholders Value Alfred Rappaport
A R T I C L E www.hbr.org Ten Ways to Create
Shareholder Value by Alfred Rappaport
Included with this full-text Harvard Business Review article:
1 Article Summary
The Idea in Brief—the core idea
The Idea in Practice—putting the idea to work
2 Ten Ways to Create Shareholder Value
13 Further Reading
A list of related materials, with annotations to guide further exploration of the article’s ideas and applications
Product 1069
This article is made available to you by Al Rappaport. Further posting, copying or distributing is copyright infringement. To order more copies go to www.hbr.org or call 800-988-0886.
Ten Ways to Create Shareholder Value
The Idea in Brief
The Idea in Practice
Many firms sacrifice sustained growth for short-term financial gain. For example, a whopping 80% of executives would intentionally limit critical R&D spending just to meet quarterly earnings benchmarks. Result? They miss opportunities to create enduring value for their companies and their shareholders. Rappaport recommends these additional practices to create long-term growth for your company:
COPYRIGHT © 2006 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED.
How to cultivate the future growth your firm needs to succeed? Rappaport identifies 10 powerful practices. First among them: Don’t get sucked into the short-term earnings-expectation game—it only tempts you to forgo value-creating investments to report rosy earnings now. Another practice: Ensure that executives bear the same risks of ownership that shareholders do—by requiring them to own stock in the firm. At eBay, for example, executives have to own company shares equivalent to three times their annual base salary. eBay’s rationale? When executives have significant skin in the game, they tend to make decisions with long-term value in mind.
Make strategic decisions that maximize expected future value—even at the expense of lower near-term earnings.
In comparing strategic options, ask: Which
operating
Shareholder Value by Alfred Rappaport
Included with this full-text Harvard Business Review article:
1 Article Summary
The Idea in Brief—the core idea
The Idea in Practice—putting the idea to work
2 Ten Ways to Create Shareholder Value
13 Further Reading
A list of related materials, with annotations to guide further exploration of the article’s ideas and applications
Product 1069
This article is made available to you by Al Rappaport. Further posting, copying or distributing is copyright infringement. To order more copies go to www.hbr.org or call 800-988-0886.
Ten Ways to Create Shareholder Value
The Idea in Brief
The Idea in Practice
Many firms sacrifice sustained growth for short-term financial gain. For example, a whopping 80% of executives would intentionally limit critical R&D spending just to meet quarterly earnings benchmarks. Result? They miss opportunities to create enduring value for their companies and their shareholders. Rappaport recommends these additional practices to create long-term growth for your company:
COPYRIGHT © 2006 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED.
How to cultivate the future growth your firm needs to succeed? Rappaport identifies 10 powerful practices. First among them: Don’t get sucked into the short-term earnings-expectation game—it only tempts you to forgo value-creating investments to report rosy earnings now. Another practice: Ensure that executives bear the same risks of ownership that shareholders do—by requiring them to own stock in the firm. At eBay, for example, executives have to own company shares equivalent to three times their annual base salary. eBay’s rationale? When executives have significant skin in the game, they tend to make decisions with long-term value in mind.
Make strategic decisions that maximize expected future value—even at the expense of lower near-term earnings.
In comparing strategic options, ask: Which
operating