ABSTRACT
The shareholder value is reflected by investors in equating the market value of a company in terms of the amount of financial securities, such as debt instruments and equity securities that are issued to investors. The shareholder value of a company is determined by how well it identifies investments that investors can expect to see in the future— higher returns in excess of the market rate required. Economic value added is a measurement that measures short-term values, that is, values added to or depleted from the shareholder value. Shareholder value is an important measurement to a shareholder. It is an objective that company managers must pursue, since shareholders measure management’s performance by how well they are able to increase their dividends and the appreciation of their stock price. Small business owners as well as large companies will be able to benefit from this concept by using it as a supplement to the traditional accounting and cash flow techniques.
