Issue № 69. August 2018

Corporate Management Focused on Business Value Growth

PhD, Associate Professor, School of Public Administration, Lomonosov Moscow State University, Moscow, the Russian Federation.
E-mail: Purlik@spa.msu.ru

The article presents the modern interpretation of the corporate management concept focused on business value growth (i.e. value based management, VBM). The hindsight analysis of the concept’s background has been conducted. The article highlights and closely examines the key elements of the concept. The author depicts key failings of accounting profit indicator that prevent it from being used as the determinant of value based management practice. Managerial tasks have been stated that are to be addressed for value based model to be implemented in a company. The analysis of ways of business’ valuation changes for shareholders has been conducted. It is shown that total shareholder return concept (TSR) can be applied neither to operating efficiency nor to senior executives’ compensation assessment process. The author formulates the core arguments against stakeholder concept while still acknowledging the possibility that during the period of transition to innovation economics we will witness the constant growth in demand of key stakeholder groups welfare maximization (and not only that of shareholders). The conclusion acknowledges the importance of the value maximization principle which establishes a unified framework for managing both separate business units and the company as a whole.

Keywords

Business value, business valuation, market value, intrinsic value, fundamental value, investment value.