Value Based Management: A Study of Maximise Shareholder's Value

This study examines the shareholder's value in the long-term. The latest studies and financial literature are analysed to determine the factors, which influence long-term shareholder value maximisation, which is ultimately the goal of the investor and the corporation itself. Frequent accounting frauds, research and development cost cuts, agency problem – these factors tend to lead to short-term gains, while providing eroded long-term performance to Equity investors. Content analysis has showed that the key to return sustainability is high quality of corporate governance, ethics and social responsibility, as well as plausible capital budgeting policy. Based on the findings, the authors propose the model which helps to create an optimal portfolio with the aim to achieve the highest shareholder value in the long term by managing the risks associated with the above-mentioned factors.