Credit risk and Shareholder value: Difference between pages

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imported>Doug Williamson
(Link with Covenant page.)
 
imported>Doug Williamson
m (Link with Corporate governance page.)
 
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#The risk that a counterparty will not settle an obligation for full value, either when due or at any time thereafter.  In exchange-for-value settlement systems, the risk is generally defined to include both replacement cost risk and principal risk.
Literally, the value accruing to shareholders.
#A weighted measure reflecting both the maximum possible amount of the credit loss (also known as the credit exposure), and the likelihood of such loss.




== See also ==
Shareholder value calculations take account of:
* [[Banker's payment]]
 
* [[Covenant]]
(i) The market value of shares;
* [[Credit default swap]]
 
* [[Credit derivative]]
(ii) Dividends paid out to the shareholders;
* [[Credit exposure]]
 
* [[Event risk]]
(iii) Capital introduced by the shareholders; and
* [[Exchange-for-value system]]
 
* [[Pre-settlement risk]]
(iv) Capital returned to the shareholders.
* [[Price risk]]
 
* [[Prime bank]]
 
* [[Principal risk]]
Often the term is used qualitatively to describe the general trend away from focusing on accounts-related measures of performance and towards economic value-based measures of performance.
* [[Replacement cost risk]]
 
* [[Risk mitigation]]
Shareholder value management emphasises the consequences of management decision-making in terms of resulting market values rather than in terms of purely accounting based measures such as accounting profits or earnings per share.
* [[Sovereign risk]]
 
 
In simple terms, shareholder value is added or created when the Internal rate of return from the firm's investment projects exceeds the appropriately risk-adjusted Weighted average cost of capital.




==Other links==
== See also ==
[http://www.treasurers.org/node/4351 Credit risk, Will Spinney, ACT 2008]
* [[Corporate finance]]
* [[Corporate governance]]
* [[Corporate value]]
* [[Cost of capital]]
* [[Dilution]]
* [[Earnings per share]]
* [[Economic value added]]
* [[Internal rate of return]]
* [[Market value]]
* [[Market value added]]
* [[Metric]]
* [[Multiples valuation]]
* [[Shareholder value analysis]]
* [[Total shareholder return]]
* [[Value driver]]
* [[VBM]]
* [[Weighted average cost of capital]]


[[Category:Credit_Risk]]
[[Category:Corporate_finance]]

Revision as of 17:37, 28 January 2018

Literally, the value accruing to shareholders.


Shareholder value calculations take account of:

(i) The market value of shares;

(ii) Dividends paid out to the shareholders;

(iii) Capital introduced by the shareholders; and

(iv) Capital returned to the shareholders.


Often the term is used qualitatively to describe the general trend away from focusing on accounts-related measures of performance and towards economic value-based measures of performance.

Shareholder value management emphasises the consequences of management decision-making in terms of resulting market values rather than in terms of purely accounting based measures such as accounting profits or earnings per share.


In simple terms, shareholder value is added or created when the Internal rate of return from the firm's investment projects exceeds the appropriately risk-adjusted Weighted average cost of capital.


See also

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