Abstract: The financial theory developed different categories of indicators - traditional and modern - in order to evaluate the firm’s value creation. The shareholders are directly interested by the value added in the company. The value creation is a complex process that implies correct decisions, common responsibility (managers and shareholders) and actions towards an efficient and profitable activity. The traditional indicators of performance are not teoritically correlated with the the value creation and in these circumstances, should be used appropriate financial indicators in order to reflect the value of the company. Therefore, the modern indicators used in the value based management framework offer a greater flexibility and efficiency and represent a good alternative for companies. Such performance indicators used to measure the financial results correlated with shareholder wealth are the Economic Value Added (EVA), as a measure of internal performance and the Market Value Added (MVA) as a measure of external performance of the company. Starting from the main deficiencies of the accounting indicators, the objective of this this study is to present the relationship between EVA and MVA and their implications on firms’valuation. Thus, the presentation and analysis of these indicators – EVA and MVA - will underline the main features, their correlations, and influence factors but also the main advantage and disadvantage of each indicator, which will enable the managers to make the correct choice and subsequently the best decision regarding the performance measures.

Abstract: Aalto University, P.O. Box 11000, FI-00076 Aalto www.aalto.fi Author Pekka Töytäri Name of the doctoral dissertation Managing value-based exchange in industrial markets: An organizational capability perspective Publisher School of Science Unit Department of Industrial Engineering and Management Series Aalto University publication series DOCTORAL DISSERTATIONS 59/2015 Field of research Service Engineering and Management Manuscript submitted 9 January 2015 Date of the defence 22 May 2015 Permission to publish granted (date) 3 March 2015 Language English Monograph Article dissertation (summary + original articles)

Abstract: F inancial planning is a goalsbased profession. Financial planners help clients determine how to accomplish their goals through advice and guidance on a variety of topics, such as saving, investing, and risk management. While investing well is generally an important part of the process of accomplishing a goal, achieving a goal often requires advice beyond building appropriate portfolios (beta) and selecting investments that are expected to outperform their peers on a risk-adjusted basis (alpha). The body of research dedicated to quantifying the potential benefits of financial planning beyond alpha and beta is growing. For example, Blanchett and Kaplan (2013), using the concept of “gamma,” found that a retiree can expect to generate 22.6 percent more in certainty-equivalent income in retirement through implementing five fundamental financial planning decisions or techniques. This paper builds on the gamma concept by determining an optimal goals-based strategy. While past research has focused primarily on determining optimal portfolios to fund different types of goals, this paper focuses on the choice of which financial goals to fund, as well as how to save for those goals over time. Certain goals, such as retirement, are decomposed where the household is assumed to have varying levels of preference with respect to replacing different amounts of income. For example, replacing 50 percent of pre-retirement income may be critical to fund nondiscretionary expenses, with the remaining levels of replacement (up to 100 percent of pre-retirement income) becoming increasingly less important. In this study, a utility model based on prospect theory was used to determine the optimal funding strategy for a household, based on the unique prefeences and financial situation of that household. Results suggest that using a goals-based framework to determine which goals to fund and how to fund them can lead to an increase in utilityadjusted wealth of 15.09 percent for a hypothetical household versus a naïve strategy focused only on funding retirement. This is equivalent to generating an annual alpha of 1.65 percent for the lifetime of the base scenario household. These potential gains suggest a significant amount of value using a goals-based financial planning approach that extends beyond traditional asset management decisions. The Value of Goals-Based Financial Planning

Abstract: Many insurers disclose Embedded Value reports, a 'capital market-consistent' valuation framework for their life insurance business, to provide investors with additional information. We examine the incremental and relative information content of Embedded Value components in comparison to the existing mandatory accounting standards. Our findings can help to predict the capital market effects of the new insurance accounting standard IFRS 4 Phase II, which will be introduced in 2018 and is based on similar principles as the EV framework. Our results show that the incremental information content of the EV framework is limited and even decreasing since 2009. The current IFRS framework seem to have more explanatory power for insurers' stock prices and returns in the current economic environment which casts doubt about benefits of IFRS 4 Phase II. Our comprehensive analysis of the incremental value relevance of EV and EV earnings subcomponents shows that investors would profit from an explicit valuation of options and guarantees and a presentation scheme of earnings which differentiates between inforce and new business.

Abstract: The diffusion of international production networks has challenged the capability of traditional trade statistics to provide an adequate representation of supply and demand linkages among the economies. To address this issue, new statistical tools (the Inter-Country Input-Output tables) and new analytical frameworks have been developed. Koopman, Wang and Wei propose an accounting methodology to decompose a country’s total gross exports by source and final destination of their embedded value added. We develop this approach further by deriving a fully consistent counterpart for bilateral trade flows, refining the original framework. Along with other contributions, our methodology completes the bridge between traditional trade statistics and the systems of national accounts and provides new tools for investigating global value chains. Here we present two empirical applications of two different versions of our decomposition of bilateral trade flows: one explores the forward linkages of Italian exports; the second derives a measure of the share of value-chain-related trade and assesses how its evolution since the mid-1990s has affected the relationship between world trade and income.

Abstract: This paper focuses on the value creation and the value drivers. One of the objectives of this paper is to present the concept of maximizing shareholder value. The main goal is to categorize the most important value drivers, and their role of the firms’ value. This study proceeds as follows. The first section presents the value chain, the primary and the support activities. The second part describes the theoretical background of maximizing shareholder value. The third part illustrates the key value drivers. The fourth empirical section of the study analyses the database featuring data from 18 European countries, 10 sectors and 1553 firms in the period between 2004 and 2011. Finally, the fifth section includes concluding remarks. Based on the related literature reviewed and in the conducted empirical research it can be assessed that, the EBIT, reinvestment, invested capital, the return on invested capital, the net margin and the sales growth rate all have a positive effect on firm value, while the tax rate and the market value of return on asset (MROA) has a negative one.

Abstract: Purpose: The purpose of this article is to study whether there exists natural relationship between fair value and corporate external market. A series of special phenomenon in the application of fair value arouses our research interests, which present evidences on how competition affects the correlation of fair value information. Design/methodology/approach: this thesis chooses fair value changes gains and losses and calculate the ratio of DFVPSit as the alternative variable of the fair value. In order to effectively inspect the mutual influence between the degree of industry competition and the value relevance of fair value, and reduce the impact of multi-collinearity, we built a regression model on the hypothesis, which supposes that if other conditions are the same, the fair value information has greater value relevance if the degree of the industry competition is greater. To test the hypothesis, we use the comparison of the DFVPSit coefficient absolute value to judge the value relevance of fair value information, and the greater the absolute value is, the higher relevance between the changes in fair value per share profits and losses with the stock prices. Findings: The higher the degree of competition in the industry is, the more fair value information relevance is. Also, there are evidences representing that fair value information often presents negative correlation with the stock price. Originality/value: The main contribution of the article is to show that not only need we make the formulation and implementation of the high quality of fair value accounting standards to suit for both the national conditions and international practice, but also need we further to improve the company's external governance mechanism to promote fair value’s information correlation.

Abstract: The concept of value existed since trade was invented and used in all fields. Economists have tried different ways to define the common denominator subjective estimation of a good size. Studying the economic value of an asset has preoccupied economists at the early days of this discipline, trying to estimate the value of an individual and then extend to \r goods that can be changed. Over time how to create and measure value had several forms: from profit indicators (economic and financial profitability, etc.) to indicators based on cash flow (cash flow, CFROI - Cash Flow Return on investment -cash return on investment, etc.) or indicators of value (EVA - Economicâ Value Added - Economic Value Added, MVA - Market value added - Market value added, etc.). Value creation is the most important goal for a company, and the development of economy and human society will bring new ways of creating value that is in step with time. The new ways of creating value refer to human capital, intellectual capital, information, goodwill, etc., which gives the opportunity to contribute to the sustainable development of society and thus to value creation. It is the result of a complex management of all aspects of the business. "Sustainability" means property of a system, where the emphasis is on maintaining a particular state of the system over time. Classification- M41, Q56, D46, G14.

Abstract: The objective of this paper is to empirically test one of Graham’s investment methods based on the net current asset value (NCAV). The NCAV is truly unique, and conservative, and commonly known as the net-net method. The ratio of the net current asset value to market value (NCAV/MV) was employed in this study to test a stock’s performance comparing to the performance of SP (b) investing in the growth period and avoiding the downturn period leads investors to earn much higher returns from the firms with a high NCAV/MV ratio; and (c) The NCAV/MV strategy requires a longer holding period of the portfolio in order to generate excess returns.

Abstract: The issue of corporate performance had been vigorously addressed in the literature using traditional accounting metrics However, contemporary studies now focus on corporate sustainability in terms of value creation and how constituents of a firm are compensated for their efforts at generating the value The current research challenge is therefore on how to appropriately define and measure firm value, bearing in mind several stakeholders that have diverse and often conflicting interests in a firm This paper fills this gap by using stakeholder perspective to explain the concept of value creation and by providing theoretical framework and methodology for measuring the value created and appropriated by a firm It is established that value creation can be measured using (1) the difference between output value and inputs value, (2) the sum of the economic rewards given to stakeholders and 3) the true cash flows generated by a firm The paper concludes that since the traditional accounting metrics have some limitations and since investors do not value accounting earnings but cash that is truly generated from a firm’ operations, a quantity that denotes value to diverse stakeholders of a firm should be used to measure firm value

Abstract: Article presents an application of least-squares Monte Carlo concept to calculation of Time Value of Options and Guarantees - Market Consistent Embedded Value component. Previously used in options' valuation method proved to be an effective and time-saving tool. Paper summarizes analysis performed on an theoretical Open Pension Fund portfolio (based on market average data).

Abstract: We have devoted the paper to verify the determinants and methodology of value management of a company. We proposed to determine the just value according to the geometric model, which uses the appropriate quantitative values with respect to the real value of a company and the objective price of its shares in the open developed financial market. Furthermore, the paper offers theoretical suggestions and practical recommendations which are useful for the investors and managers in making timely financial decisions

Abstract: Recently, liquidity-driven economic policies have mounted a challenge to time-series value investing. In this paper, we examine the risk-return performance of simple value indicators.We find that: 1) even though long term equity returns are partially predictable, directional value investing delivers mediocre results; 2) the "Central Bank put" is a fly in the ointment for value investors; 3) relative value has broadly outperformed absolute value. Lastly, we conjecture that the poor performance of directional value investing hides substantial overvaluations in U.S. equities.

Abstract: Strategic planning in non-life insurance companies must consider differing demands from the company’s various stakeholders. While investors and shareholders require growth in equity market value, rating agencies, costumers and the authorities focus on the company’s solvency, that is, the amount of capital covering the business risks. In that regard, growth in premium income and business profitability are critical, but opposing drivers for operative management. In this article, we model profitability in the insurance business in dependence on premium growth and analyse the impact of the underlying growth strategy on shareholder value and solvency for a non-life insurance company. In a multi-period framework, we find that an optimal growth strategy, maximising net present value and fulfilling a solvency constraint can be derived in dependence on the initial insurance portfolio mix of new and renewal business. The results of the analysis further demonstrate that higher growth rates can lead to lower equity values and vice versa, and that the solvency constraint can prohibit a shareholder-value-maximising strategy. Therefore, the approach is useful in supporting strategic decision-taking and value-based management in non-life insurance companies.

Abstract: The diffusion of international production networks has challenged the capability of traditional trade statistics to provide an adequate representation of supply and demand linkages among the economies. To address this issue, new statistical tools (the Inter-Country Input-Output tables) and new analytical frameworks have been developed. Koopman, Wang and Wei propose an accounting methodology to decompose a country’s total gross exports by source and final destination of their embedded value added. We develop this approach further by deriving a fully consistent counterpart for bilateral trade flows, refining the original framework. Along with other contributions, our methodology completes the bridge between traditional trade statistics and the systems of national accounts and provides new tools for investigating global value chains. Here we present two empirical applications of two different versions of our decomposition of bilateral trade flows: one explores the forward linkages of Italian exports; the second derives a measure of the share of value-chain-related trade and assesses how its evolution since the mid-1990s has affected the relationship between world trade and income.

Abstract: Insurance companies increasingly augment their financial reports by releasing actuarial measures—the so-called embedded value—to supply information about the value of their life insurance activities. Both accounting and actuarial measures differ with respect to the timeliness of profit realisation and its reliability, and their performance in yielding information may differ. This paper asks if and how embedded values help in assessing risk premiums. We estimate multifactor market models in the spirit of Fama and French, and find that actuarial disclosures are superior to financial accounting in estimating these risk premiums. They further add information to financial reports as an estimator for growth opportunities.

Abstract: SYNOPSIS: European life insurers began disclosing embedded value information (EV) over a decade ago due to concerns with traditional local accounting standards. EV is an estimate of the present value of future net cash flows from in-force life insurance business. However, U.S.-based life insurers have yet to adopt this disclosure, although several surveys and empirical studies suggest that EV disclosure provides valuable information in assessing life insurers' performance. This paper examines the incremental valuation effects of EV disclosure in the presence of U.S. GAAP. We utilize a sample of cross-listed life insurers as surrogates to assess the valuation effects of EV disclosures for U.S. life insurers. Our empirical results show a higher association between EV and stock market prices than those of traditional accounting metrics such as earnings or book value. The results also show that EV has incremental explanatory power beyond those of traditional U.S. GAAP accounting measures. Our findings provide...