IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v16y2024i9p3711-d1385375.html
   My bibliography  Save this article

Effectiveness of Company Value Creation Based on Excess Market Value-Added Assessment

Author

Listed:
  • Jarosław Kaczmarek

    (Department of Economics and Organization of Enterprises, Krakow University of Economics, Rakowicka St. 27, 31-510 Kraków, Poland)

Abstract

This article aims to assess the usefulness of excess market value added to equity as an external measure of company value creation from the perspective of meeting shareholder expectations. This measure compares the expected value as an increase in stock exchange capitalisation in relation to return on equity, equivalent to its cost, decreased by this capital, in relation to the actually achieved level of capitalisation. This paper investigates relations with other external and internal measures. This research is based on measuring value creation in WIG30 Warsaw Stock Exchange companies in 2017–2023. The assessment of the research results was based on mathematical statistics tools, the density measure and the taxonomic measure of similarity. The study tested four hypotheses. The results of this research showed that the excess measure does not distort market information and can be used to assess the effectiveness of shareholder value creation, taking into account shareholder expectations. Secondly, the paper pointed to an unsatisfactory level of value creation in WSE WIG30 companies. The negative assessment of value creation management refers both to effectiveness and efficiency. Thirdly, shareholders continue to use classical financial measures despite the existence of a wide spectrum of value measures. Fourthly, the paper points to the lack of theoretical equality between the market value added (an external measure) and capitalised economic value added (an internal measure). The presented research contributes to unbiased assessments of whether or not shareholder value is simultaneously created and realised in increased share prices (capitalisation) to a higher degree than shareholder expectations. Up to now, no such research studies have been conducted for Polish and foreign capital markets. The research methodology has practical applications in expectations-based management.

Suggested Citation

  • Jarosław Kaczmarek, 2024. "Effectiveness of Company Value Creation Based on Excess Market Value-Added Assessment," Sustainability, MDPI, vol. 16(9), pages 1-25, April.
    • Handle: RePEc:gam:jsusta:v:16:y:2024:i:9:p:3711-:d:1385375
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/16/9/3711/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/16/9/3711/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Tobias Hahn & Frank Figge & Ralf Barkemeyer, 2007. "Sustainable Value creation among companies in the manufacturing sector," International Journal of Environmental Technology and Management, Inderscience Enterprises Ltd, vol. 7(5/6), pages 496-512.
    2. Colin Mayer, 2021. "The Future of the Corporation and the Economics of Purpose," Journal of Management Studies, Wiley Blackwell, vol. 58(3), pages 887-901, May.
    3. Efrat Dressler & Yevgeny Mugerman, 2023. "Doing the Right Thing? The Voting Power Effect and Institutional Shareholder Voting," Journal of Business Ethics, Springer, vol. 183(4), pages 1089-1112, April.
    4. Rosa Dangelico & Devashish Pujari, 2010. "Mainstreaming Green Product Innovation: Why and How Companies Integrate Environmental Sustainability," Journal of Business Ethics, Springer, vol. 95(3), pages 471-486, September.
    5. Jarmila Straková & Antonín Korauš & Jan Váchal & František Pollák & Filip Černák & Milan Talíř & Jaroslav Kollmann, 2021. "Sustainable Development Economics of Enterprises in the Services Sector Based on Effective Management of Value Streams," Sustainability, MDPI, vol. 13(16), pages 1-15, August.
    6. Bradford Cornell & Alan C. Shapiro, 2021. "Corporate stakeholders, corporate valuation and ESG," European Financial Management, European Financial Management Association, vol. 27(2), pages 196-207, March.
    7. Robert D. Klassen & Curtis P. McLaughlin, 1996. "The Impact of Environmental Management on Firm Performance," Management Science, INFORMS, vol. 42(8), pages 1199-1214, August.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jarosław Kaczmarek, 2019. "The Mechanisms of Creating Value vs. Financial Security of Going Concern—Sustainable Management," Sustainability, MDPI, vol. 11(8), pages 1-24, April.
    2. Mauro Romano & Antonio Netti & Antonio Corvino & Marika Intenza, 2024. "Environmental innovation in healthcare industry: The moderating role of women on board in cost of debt," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(3), pages 1921-1933, May.
    3. Mahabubur Rahman & Saqib Aziz & Mathew Hughes, 2020. "The product‐market performance benefits of environmental policy: Why customer awareness and firm innovativeness matter," Business Strategy and the Environment, Wiley Blackwell, vol. 29(5), pages 2001-2018, July.
    4. Palmer, Mark & Truong, Yann, 2017. "The Impact of Technological Green New Product Introductions on Firm Profitability," Ecological Economics, Elsevier, vol. 136(C), pages 86-93.
    5. Chenli Yin & Maria Paz Salmador & Dan Li & M. Begoña Lloria, 2022. "Green entrepreneurship and SME performance: the moderating effect of firm age," International Entrepreneurship and Management Journal, Springer, vol. 18(1), pages 255-275, March.
    6. Prayag Lal Yadav & Seung Hun Han & Hohyun Kim, 2017. "Manager’s Dilemma: Stockholders’ and Consumers’ Responses to Corporate Environmental Efforts," Sustainability, MDPI, vol. 9(7), pages 1-14, June.
    7. Kittisak Jermsittiparsert & Sudawan Somjai & Sriparinya Toopgajank, 2020. "Factors Affecting Firm s Energy Efficiency and Environmental Performance: The Role of Environmental Management Accounting, Green Innovation and Environmental Proactivity," International Journal of Energy Economics and Policy, Econjournals, vol. 10(3), pages 325-331.
    8. Sven Horak & Bindu Arya & Kiran M Ismail, 2018. "Organizational Sustainability Determinants in Different Cultural Settings: A Conceptual Framework," Business Strategy and the Environment, Wiley Blackwell, vol. 27(4), pages 528-546, May.
    9. Jegoo Lee & Sang-Joon Kim, 2017. "Curvilinear Relationship between Corporate Innovation and Environmental Sustainability," Sustainability, MDPI, vol. 9(7), pages 1-15, July.
    10. Ozusaglam, Serdal & Kesidou, Effie & Wong, Chee Yew, 2018. "Performance effects of complementarity between environmental management systems and environmental technologies," International Journal of Production Economics, Elsevier, vol. 197(C), pages 112-122.
    11. Yogesh Bhatt & Karminder Ghuman, 2023. "Corporate environmental responsiveness: a bibliometric and content analysis," Management Review Quarterly, Springer, vol. 73(3), pages 1303-1350, September.
    12. Prayag Lal Yadav & Seung Hun Han & Jae Jeung Rho, 2016. "Impact of Environmental Performance on Firm Value for Sustainable Investment: Evidence from Large US Firms," Business Strategy and the Environment, Wiley Blackwell, vol. 25(6), pages 402-420, September.
    13. Chengli Shu & Kevin Z. Zhou & Yazhen Xiao & Shanxing Gao, 2016. "How Green Management Influences Product Innovation in China: The Role of Institutional Benefits," Journal of Business Ethics, Springer, vol. 133(3), pages 471-485, February.
    14. Nahyun Kim & Jon J. Moon & Haitao Yin, 2016. "Environmental Pressure and the Performance of Foreign Firms in an Emerging Economy," Journal of Business Ethics, Springer, vol. 137(3), pages 475-490, September.
    15. Chipo Mukonza & Ilze Swarts, 2020. "The influence of green marketing strategies on business performance and corporate image in the retail sector," Business Strategy and the Environment, Wiley Blackwell, vol. 29(3), pages 838-845, March.
    16. Truong, Yann & Pinkse, Jonatan, 2019. "Opportunistic behaviors in green signaling: When do firms engage in symbolic green product preannouncement?," International Journal of Production Economics, Elsevier, vol. 218(C), pages 287-296.
    17. Constantine S. Katsikeas & Constantinos N. Leonidou & Athina Zeriti, 2016. "Eco-friendly product development strategy: antecedents, outcomes, and contingent effects," Journal of the Academy of Marketing Science, Springer, vol. 44(6), pages 660-684, November.
    18. Hyundo Choi & Donggyu Yi, 2018. "Environmental innovation inertia: Analyzing the business circumstances for environmental process and product innovations," Business Strategy and the Environment, Wiley Blackwell, vol. 27(8), pages 1623-1634, December.
    19. Francesco Martielli & Antonio Salvi & Emanuele Doronzo, 2024. "Corporate social responsibility practices and value creation through open innovation approach: Evidence from the STOXX Europe 600 Index," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(5), pages 4732-4745, September.
    20. Ammar Masood & Mohsin Altaf & Mohsin Raza Khan & Tanveer Illahi & Abdul Qayyum, 2021. "Industrial Environmental Performance: Mapping And Systematic Literature Review," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 10(4), pages 76-100, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:16:y:2024:i:9:p:3711-:d:1385375. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.