Investor Expectations in Value Based Management

Understanding the process of shaping investor expectations is essential to describe and predict changes in the value of assets on the financial markets, especially stock prices on the capital markets and thus the value of companies listed on them. The main objective of this book is to include the investor expectations in the concept of enterprise value management and measurement of shareholders value creation. It seems that the role of expectations, as a determinant of investment decisions on the capital market, requires a deep insight and highlight the importance of managing the expectations for creating value for shareholders, in particular in the context of the financial crisis of 2007-2009. Creating value for shareholders is to overcome investor expectations for the rate of return on their initial investment. That means that managers must understand how investors build their expectations. According to studies conducted by T. Copeland and A. Dolgoff'a there is a strong and statistically significant relation between the shareholders returns and the two types of variables: changes in expectations for the future earnings and changes in the level of interference of provided information. Almost 50% of the variance of return rates can be explained by these two variables. Studies have also shown that changes in expectations for long-term profits have a significant and immediate impact on the share price. Readers of this book will be able to understand the process of investor expectation formulation, will know how to create value in response to investor expectations and how to consciously shape investor expectations in order to increase company value.

Explains the process of shaping investor expectations on capital markets including some motivational and cognitive tendencies of investors' thinking Contains first research of correlations between information asymmetry and investor expectations and creation of shareholder value in companies listed on the Warsaw Stock Exchange Includes guidance about how to use investors' relations and information policy to increase value through expectations based management Includes supplementary material: sn.pub/extras

Autorentext
Magdalena Mikoajek-Gocejna - Ph.D. in economics in the field of management, assistant professor in the Institute of Value Management at Warsaw School of Economics, co-author of several books and numerous scientific articles in the area of value based management, investor relations, investor expectations and value reporting.

Inhalt
High Uncertainty of Companies' Operations Versus Value Creation in VBM Systems.- Expectations in the Theory of Economics.- Investors' Expectations.- Creation of Investors' Expectations - the Role of Investor Relations and Company Information Policy.- Including Investors' Expectations in the Concept of Value Based Management.- Information Asymmetry and the Problem of Informational Efficiency on Capital Markets.- Information Asymmetry Versus Investors' Expectations and Creating Shareholder Value in Companies Listed on the Warsaw Stock Exchange.- Conclusions.