Economic Themes (2011) 49 (1) 10, 123-136
Milan Čupić
Abstract: The aim of this paper is to analyze basic accounting measures in order to determine level of their compliance with the goal to maximize shareholder value. Shareholder value is defined as present value of the future net cash flow (dividends, capital gains, etc) that shareholders expect to obtain from investing in a company. As shown in this paper, although use of accounting measures is simple it results in only partially reliable performance indications, since accounting data weakly correspond with amount, dynamics and riskiness of future net cash flow.
Keywords: shareholder value; dobitak; rate of return; earnings per share; P/E ratio
COMPLIANCE OF ACCOUNTING MEASURES WITH A GOAL TO MAXIMIZE SHAREHOLDER VALUE
Milan Čupić
Abstract: The aim of this paper is to analyze basic accounting measures in order to determine level of their compliance with the goal to maximize shareholder value. Shareholder value is defined as present value of the future net cash flow (dividends, capital gains, etc) that shareholders expect to obtain from investing in a company. As shown in this paper, although use of accounting measures is simple it results in only partially reliable performance indications, since accounting data weakly correspond with amount, dynamics and riskiness of future net cash flow.
Keywords: shareholder value; dobitak; rate of return; earnings per share; P/E ratio
