Abstract: In the last two decades, numerous studies have been conducted to find sources and explanations for value creation and the value drivers of share returns or shareholder value creation by firms. This study aimed to determine whether more refined firm categorization and an increase in the number of variables analyzed would yield more robust information on value creation measures that financial decision-makers can use. Four different categories of firms were compiled. For each category, 11 different internal performance measures were regressed against two different external shareholder value creation measures. The empirical results show that different value creation measures explain shareholder value creation best for different categories of firms. Economic-based indicators provide higher information content than accounting-based indicators for financial decision-making. The information content of internal value drivers varied when different external shareholder value indicators were used. This study provides financial decisionmakers with a more specific indication of the use of shareholder value creation measures for specific firm types.

Abstract: This paper investigates the value relevance of accounting information in the presence of ineffective internal control (IIC). Based on Ohlson’s valuation model, this paper first documents that IIC can directly affect a firm’s market value after control cost of capital, corporate governance, and other, value-relevant variables. Second, this paper finds that the value relevance of earnings and book value in determining a firm’s market value are significantly reduced. Collectively, the results of this paper indicate that the effectiveness of internal controls can directly affect a firm’s market value and the value relevance of accounting information.

Abstract: Ever since Mayers and Smith first claimed, 30 years ago, that the corporate form provides an effective hedge that allows stockholders to eliminate insurable risk through diversification, the quest to explain the corporate demand for insurance has continued. Their claim is demonstrated here so that the corporate demand for insurance may be distinguished from the individual’s demand for insurance. Then some of the determinants of the demand for corporate insurance that exist in the literature are reviewed and generalized. The generalizations show how the corporation may use insurance to solve underinvestment and risk-shifting problems; the analysis includes a new simpler proof of how the risk-shifting problem may be solved with corporate insurance. Management compensation is also introduced here and the analysis shows the conditions which motivate the corporate insurance decision. Finally, some discussion is provided concerning the empirical implications of the extant theory, the tests that have been made, and the tests that should be made going forward.

Abstract: This paper compares different performance metrics used for value-based management in life and non-life insurance business. The goal is to find a consistent basis for performance measurement at the insurance group level. This is important since management techniques used in non-life insurance, such as economic value added and risk-adjusted return on capital, are at first sight very different from those used in life insurance, that is, an analysis of market-consistent embedded value earnings, thus making management difficult at the group level. This paper aims to compare and contrast these concepts and to show that all approaches can be unified under a single consistent framework, and that all present residual cash flow concepts that can be linked under the residual income valuation theory.

Abstract: The subject of this paper is a modified net present value, and how it could be a useful tool for synergy valuation in the process of business combination. Every successful acquisition has to result in synergy in the post acquisition value. In the process of valuation each company has three components that must be taken into account for an efficient valuation (assets, earning power and firm uniqueness). The process of analyzing business combination could be divided in three interdependent analyses: (1) An analyst must start by applying traditional capital budgeting analyses; (2) followed by identifying various flexibility options; and finally, (3) an analyst must determinate the present value of other strategic options along with the overall certainty of exercising them, together with the added certainty value of these options on traditional present value of business combination. Traditional capital budgeting analyses of business combination is based on net present value techniques. These techniques result with inadequate present value if the post-acquisition reinvestment rate is different from the post-acquisition cost of capital. In these cases, the analyst can apply modified net present value method.

Abstract: The principal problems associated with the concept of strategic corporate management is to identify the financial and non-financial value drivers In Value Based Management theory the main focus was on financial value drivers but today there is a serious necessity of intangible resources (intellectual capital) valuation and identification Most studies concerning the measurement of intangible resources relates to companies in such industries as biotechnology, aerospace, computer software, cosmetics, healthcare, In-ternet, media, advertising, pharmaceuticals and computer industry The main goal of this paper is to propose value drivers (ratios) that can be used in shareholder value creation process in corporation

Abstract: Many life insurance companies outside the US disclose embedded value (EV), an actuarial estimate of the present value of the future net cash flows arising from the company’s in-force life insurance business. Industry surveys have shown that EV is used by analysts for valuation purposes. However, there is little empirical research of EV disclosures. This study fills that void by testing the valuation relevance, information content and reduction in information asymmetry associated with the reporting of EV. We provide evidence supporting the premise that the market prefers EV to traditional accounting metrics in assessing security prices. This study advances our understanding of the valuation effects of corporate voluntary disclosures, and should be of interest to financial reporting standard setters such as the IASB and the FASB who are currently working on harmonizing financial reporting in the insurance industry.

Abstract: This study examines the informational content and relevance to external stakeholders of voluntary embedded value (EV) disclosures by publicly listed European life insurers and bancassurances post the voluntary adoption of the European embedded value principles (EEVPs) in 2005. It is found that despite the increase in the number of European life insurers and bancassurances that have adopted EEVPs since 2005, diversifications in practice for EV calculation and disclosure between companies and countries have not been eliminated. It also reveals that EV earnings have no incremental information content beyond the statutory accounting information, although some EV disclosures, namely the present value in-force (PVIF), have information content over and above statutory earnings and book value of equity.

Abstract: This paper assesses the impact of longevity risk management on insurer shareholder value and solvency for an annuity portfolio. The analysis uses a multi-period stochastic mortality model with both systematic and idiosyncratic longevity risk. We consider both survivor, or longevity, swaps that provide a full longevity risk hedge, and index-based survivor, or longevity, bonds that do not hedge idiosyncratic longevity risk. Shareholder value includes the impact of the costs of transferring longevity risk, policyholder demand elasticity, regulatory capital requirements, capital relief, and frictional costs including the insolvency put option, agency costs, and financial distress costs. Shareholder value is based on an Economic Value (EV) and a Market-Consistent Embedded Value (MCEV) approach. Capital management is assessed based on a recapitalization and dividend strategy that maintains regulatory capital requirements, as defined under Solvency II. We demonstrate how longevity risk management strategies significantly reduce the volatility of shareholder value and frictional costs. Longevity risk managementreducesthe probability of insolvency, increases policyholder demand and hence increases shareholder value.

Abstract: The manner in which resources are allocated, the generation of cash through present resources and the allocation of new liquidities derive from a company's cost-benefit analysis, which is part of management control. The modern financial theory changes the company management objective of maximizing profit with the objective of maximizing its value. The traditional return measures are considered to be insufficient to express the economic reality. Traditional cost-benefit indicators exclude opportunity costs, effects of inflation and risks. The financial experts claim firm value maximization as the main objective of a company's management. The emergence of modern return measures derived from firm value maximization reflects the changes in the economic environment, their emergence creating a dispute over the most appropriate approach regarding value creation. The fact that the data required for their calculation is taken directly from accounts makes them sensitive to accounting distortions. The emergence of modern cost-benefit indicators derived from value creation provides new perspectives on the return. Firm value can grow by generating a higher level of cash flow, by reducing financing costs and by extending the growth period. The value created can be measured by using both modern indicators derived from the theory of value creation and discounted cash flow methods. The value created can be calculated by using discounted cash flow models, which, moreover, are very complicated and take into account a lot of variables. The alternative to these methods is represented by modern cost-benefit indicators that have a more simple calculation methodology, and the forecast of calculation factors is narrower and easier to accomplish. In this article, we will present the connection between discounted cash flow methods and the indicators derived from value creation, based on the business finance theory, which says that firm value will increase if projects with positive net present value are accepted, while it will be destroyed if projects with negative net present value are accepted.

Abstract: An insurance product provides coverage for value escalation in a highly capitalized project. One or more indices are used to obtain a quantification of volatility of the value of the project over the project lifecycle. Probabilities of value changes over the project lifecycle can be generated from an index, which can be solely representative of the project value, or can be the result of combinations of one or more indices to approximate project value changes. The project value change probabilities are used to estimate an amount of insurance coverage that can be applied to cover project value changes. The party responsible for the project can purchase the insurance product with a premium derived from the amount and type of coverage tied to the index. The insurance product assists the responsible party in containing changes in project value over the course of the project life cycle.

Abstract: Medical education is expensive and so we must ensure that we deliver maximum value for money for all funding spent on it. This is now broadly accepted, however debate remains about how we can ensure that we get value for money from medical education. There are a number of different models whereby we can ensure this. One emerging model is that of value-based pricing. Value-based pricing means that the payer (e.g. the government) will pay a price for medical education that is related to the value or worth of the education. The cost needed to create the intervention is irrelevant in this model. This model encourages providers of education to develop methods of education that have excellent outcomes for the costs spent. However it can be difficult to decide whether an outcome has value and even more difficult to assign a monetary value to that outcome. Various forms of value-based pricing can be applied – these include the price sensitivity meter, conjoint analysis, and economic value estimation. There is no single correct model of value-based pricing that works in all circumstances – it all depends on the context and the consumer.

Abstract: Value Innovation Works Richard K. Lee & Nina E. Goodrich (CreateSpace Independent Publishing; May 2012) By defining value innovation as "delivering exceptional value to the Most Important Customer in the Value Chain, all the time, every time," Richard K. Lee and Nina E. Goodrich set both the tone of the book and the expectation of the reader right from the start. The focus of the book is a 10-step "value innovation process," which provides a practical how-to for practitioners. The steps include: 1. Define project mission and objectives. 2. Define value chain and identify the most important customer. 3. Develop "as is" and "best in class" value curves. 4. Carry out contextual interviews. 5. Develop "to be" value curve. 6. Review "to be" value curve with the most important customer. 7. Modify "to be" value curve. 8. Define value proposition. 9. Determine how to deliver the "what." 10. Confirm with most important customer that the "how" is compelling. The authors suggest that completing the process and implementing value innovation using the enabling tools provided--which should take 10-12 weeks, they say--will prepare companies to achieve sustainable and profitable growth. The book draws heavily on the authors' experience in the innovation field as well as their hands-on workshops and lectures. Lee and Goodrich seem to be very knowledgeable, and the process they describe is relatively straightforward. They identify the value chain as consisting of each individual or organization involved in the transactions--as a seller, buyer, or user--that lead from the origination of the product through to the end user. For real estate firm Re/Max, for instance, the value chain consists of the franchisee (the individual or company operating the individual office), the sales affiliate (the agent who lists or shows a property), and the seller and buyer of a property. Once the value chain is established, the most important customer (MIC) in that chain must be identified. The MIC is the single element in the value chain who is most directly responsible for correcting daily problems, stands to lose most financially in the event of a problem, and most clearly recognizes the value of the company's offering. For Re/Max, the MIC is the sales affiliate, who must address issues and problems with listings as they arise, suffers financially if a deal fails to close, and gleans value from the parent company's services and support structures. Once the value chain and MIC are defined, the remaining steps in the process generate value curves by listing the elements of performance with regard to the value being delivered to the MIC. The curves are iterated and refined by meeting with the MIC and identifying its unmet needs. …

Abstract: Valuation is the first step towards intelligent investing. When an investor attempts to determine the worth of his shares based on the fundamentals, it helps him to make informed decisions about what stocks to buy or sell. The investment decision to buy or sell a security is always based on the comparison of its intrinsic value with that of its market value. Because Fundamental analysts believe that market value of each share follows it intrinsic value. The intrinsic or the fundamental value is the realization of all the future cash flows in the form of capital appreciation and dividend. This empirical study aims at assessing the fundamental value or intrinsic value of a share using Gordon and Shapiro model (1956) of general dividend discounted model (the model assumes a unique dividend growth rate as “g) and Multiplier Approach of valuation using P/E ratio. Both the approaches are based on the principle that the value of any investment is the present value of all its future cash flows. The present study used t-test to check the deviation between the calculated values with that of market value in order to check any significance difference is present or not. It focuses on Indian Pharmaceutical sector taking “A” category shares into consideration. The present study checks whether the share is overpriced or under priced by comparing the calculated fundamental value with that of the market value.

Abstract: The aim of this study is to examine the information content of net value added in regard to enterprise profitability and its market value. Moreover, the study attempts to examine whether net value added information has incremental information content above that of earnings figure and the enterprise book value. (40) Industrial and service companies listed in Amman Stock Exchange represent the study sample during the period 2001-2010. Regression analysis is employed to examine the study's hypotheses. The study reached to the following results: 1- There is a significant and positive relationship between earnings figure of the current year and earnings figure of the next year. 2. Net value added does not have an incremental information content regarding future profitability above that of current profitability. 3. There is positive significant relationship between market value of common equity and book value of common equity. 4. The earnings figure provides incremental information content regarding market value above that of book value. 5. Net value added does not have an incremental information content regarding market value above that of book value and earnings figure. Keywords: Net Value Added, return on equity, Information Content, Jordan.

Abstract: All elements of asset, debts and personal capitals are presented in the financial statements with a corresponding value. The main idea of this article is the importance of determination of the fair book entry valueof these balance elementsin accounting, because the users of the accounting-financial information appreciate it very much. In the following pages, we shall present some important aspects regarding the value concept in accounting,the main types of values, economic factors which determin this value, all this informationsustaining the central idea of the article.

Abstract: Estimating the market value of dividend imputation tax credits is an important component of cost of capital estimation for companies operating within a dividend imputation tax system. There is a divergence of views about what represents an appropriate estimate of this value, and the different values that have been proposed have a substantial impact on the estimates of the cost and value of equity. This thesis provides a range of empirical evidence on the appropriate estimate of the value of imputation credits by conducting three major studies, each approaching the issue from a different angle. In the first study we infer the value of cash dividends, and the imputation tax credits that are attached to them, from simultaneous trades of ordinary shares (which entitle the holder to dividends and imputation credits) and individual share futures contracts (which provide no such entitlement). Our sample contains more than 30,000 observations from the period subsequent to the year 2000 change in tax laws that allowed a rebate for unused credits. Over this sample we find that the value of the combined bundle of one dollar of cash dividend and imputation credit is close to one dollar. We also show that the value of cash dividends and the value of imputation credits are estimated jointly and that it is important that they are interpreted jointly.The second study provides a complementary approach to the first by utilizing the prices of alternative derivative securities to infer the embedded value of dividends. We infer the value of the dividend package that is comprised of cash dividends, and the imputation tax credits that are attached to them, from simultaneous trades of ordinary shares (which entitle the holder to dividends and imputation credits) and exchange traded call options (which provide no such entitlement). Our sample contains more than 370,000 observations from the period subsequent to the year 2000 change in tax laws that allowed a rebate for unused credits. Over this sample, we estimate the value of the dividend package tobe approximately equal to the face value of the cash dividend.The third study examines the market impact of various significant changes to the dividend tax system to draw conclusions about the value of imputation credits incorporated in equity prices. The results of the third study suggest that the introduction of dividend imputation had no significant impact on equity prices in Germany and Australia. Our pricing model for Germany reveals no detectable difference in returns for the period of the introduction of dividend imputation and those of control period. Likewise our pricing model for Australia finds no difference between returns in the introduction period and those in the control period.The results of all three studies are consistent with dividend imputation having an immaterial effect on the cost of capital of Australian firms. This evidence is also consistent with the dominant commercial and market practices of making no adjustment in relation to dividend imputation when estimating the cost of capital or performing any other valuation exercises.

Abstract: In recent years, we have witnessed increasing acceptance of Embedded Value (EV)reporting as the most robust measure of shareholder value for life and health insurance businesses. Therefore, the Commissioner of Insurance in Israel decided to require insurance companies to disclose the EV of their life, pensionand health insurance business annually, beginning with the annual statements for FY 2007. Even though the insurance and financial community expected the publication of the EV data and emphasized its importance, the reaction of the capital market seemed to ignore the EV data.All things being equal, if an insurer is writing profitable new business, its market capitalization should exceed its EV. However, the market capitalization of all listed insurance companies in Israel isfar below their reported EV, and the gap is growing. The purpose of this article is twofold:a) I suggest several explanations for this apparent EV "puzzle," both competing and complementary; b)I argue that although the question of whether the EV report and MCEV methodology really indicate the fair value of the insurance company remains controversial, the EV report contains data that gives better insights into the forces driving operating performance and the impact of management actions. The EV analysis should also be considered when evaluating management performance and remuneration schemes.

Abstract: The asset value of government has traditionally been seen as the accounting value of public assets. But an alternative more market oriented concept can be backed out of credit default swap pricing, as implied sovereign asset value. Unlike the private sector, it is not a necessary public sector objective to maximise functional asset value as such. Asset volatility impacts on the division of asset value as between debt holders and taxpayers as the implied equity holders. Governments exposed more to economic shocks need to make more provision for buffering implied equity exposure. The ability to do so endows a real option value to budget flexibility. Relating the backed out asset value or cover to selected economic drivers can be a instructive exercise for market participants as well as for governments.

Abstract: The main goal of the firms is shareholder wealth maximization. Today, investors, creditors and managers attempt to find a timely and reliable index to measure the wealth of shareholders. Performance measurement is an effective factor on shareholder wealth maximization. Firms performance measurement to ensure efficient allocation of limited resources is vital and if appropriate measure of performance and shareholder value are not used the, firm doesn’t move into real value and allocating capital is not done correctly. The present study determined the best variable explaining the market value of the companies listed on TSE. To do this, the effect of four variables including 2 criteria of traditional performance (net operating profit after tax, P/E per share) and two criteria of economical performance evaluation (economic value added (EVA) and free cash flow) on market value of the company were evaluated. The study sample consisted of companies of four industries (cement, automobiles, pharmaceuticals and chemicals) listed on TSE during the 1998-2009 were chosen. Results indicate that the type of industry is effective in determining the best variable determining the market value of the company and no single measure is presented as the best measure of determining the market value of the company a in all industries. Normal 0 false false false RU X-NONE X-NONE /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Обычная таблица"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-qformat:yes; mso-style-parent:""; mso-padding-alt:0cm 5.4pt 0cm 5.4pt; mso-para-margin-top:0cm; mso-para-margin-right:0cm; mso-para-margin-bottom:10.0pt; mso-para-margin-left:0cm; line-height:115%; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin;}

Abstract: IFRS requires that for purchase accounting purposes, insurance liabilities are measured at their “fair value”. Purchase accounting for insurance contracts proves to be a challenging topic for standard setters, preparers, and users, given the absence of specific guidance in IFRS for this particular case. Recent developments, in particular the 2010 IFRS Insurance Contract Exposure Draft, the 2010 Solvency II QIS 5 Technical Specifications and the 2009 Market Consistent Embedded Value (MCEV) Principles, may be seen as providing relevant techniques in this context but do not present clear guidance specifically for fair values as required for purchase accounting purposes. This paper compares fair value as required for purchase accounting within the current IFRS Phase II process, the proposed Solvency II regulations and the practical actuarial concept of MCEV. Potential investors may benefit from this as discretionary elements in M&A transaction accounting, and their implications should be taken into account early in the transaction process of insurance companies.