Resolution and Shareholder value: Difference between pages

From ACT Wiki
(Difference between pages)
Jump to navigationJump to search
imported>Doug Williamson
(Add 4th and 5th definitions. Sources: linked pages.)
 
imported>Doug Williamson
m (Link with Corporate value page.)
 
Line 1: Line 1:
1. ''Decision making.''
Literally, the value accruing to shareholders.


A formal decision of a body such as a board of directors, recorded in writing.


Shareholder value calculations take account of:


2. <i>Bank insolvency</i>.
(i) The market value of shares;


The special process of resolving the problem of the actual or threatened insolvency of financial firms.
(ii) Dividends paid out to the shareholders;


(iii) Capital introduced by the shareholders; and


The speed with which value destruction occurs in a failing financial firm means that normal corporate insolvency processes and liquidation are inappropriate for such firms.  
(iv) Capital returned to the shareholders.


As in normal insolvency, losses will be expected for some creditors.


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.


Resolution is the orderly failure of a firm, under the control of the resolution authority.
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.




Contrast with ‘[[recovery]]’ in which a financial firm facing difficulties is returned to acceptable financial health without imposing losses on the distressed firm's creditors.
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.
 
 
 
3. <i>Non-financial firms</i>.
 
Similar processes for resolving the problem of actual or threatened insolvency of a non-financial firm.
 
 
<span style="color:#4B0082">'''''Reverse takeover'''''</span>
 
:"I joined Gala Coral Group, which was a high-leveraged private equity (PE) business.
 
:This was my first group treasurer position supporting the resolution of a defaulted propco structure, the disposal of the Gala Bingo business and PE exit scenarios, including the eventual reverse takeover of Ladbrokes."
 
:''Adam Richford FCA FCT, Group Treasurer, Renewi, The Treasurer, August 2018, p17.''
 
 
4. ''Disputes.''
 
The conclusion of a dispute.
 
Sometimes to the satisfaction of all parties, or at least with their agreement to close the matter.
 
For example, by adjudication or mediation.
 
 
5. ''Problem solving.''
 
The solving of a problem.




== See also ==
== See also ==
* [[Adjudication]]
* [[Corporate finance]]
* [[Bailin]]
* [[Corporate value]]
* [[Board of directors]]
* [[Cost of capital]]
* [[Board resolution]]
* [[Dilution]]
* [[Contagion]]
* [[Earnings per share]]
* [[Default]]
* [[Economic value added]]
* [[Directive]]
* [[Internal rate of return]]
* [[Exit]]
* [[Market value]]
* [[Financial stability]]
* [[Market value added]]
* [[Insolvency]]
* [[Metric]]
* [[Key Attributes]]
* [[Weighted average cost of capital]]
* [[Leverage]]
* [[Liquidation and Payout]]
* [[Mediation]]
* [[OLA]]
* [[Private equity]] (PE)
* [[Purchase and Assumption]]
* [[Recovery]]
* [[Resolution Authority]]
* [[Resolution plan]]
* [[Resolution weekend]]
* [[Reverse takeover]]
 
 
=== Other links ===
[https://www.bankofengland.co.uk/financial-stability/resolution The Bank of England's approach to resolution]


[[Category:Corporate_financial_management]]
[[Category:Corporate_finance]]
[[Category:Compliance_and_audit]]

Revision as of 22:19, 1 September 2014

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