Value drivers for non-bank listed companies

Abstract

With the ever-increasing competition brought about by globalisation, companies must ensure sustainable profitable growth in the future in order to be able to provide an adequate return, which is required by the shareholders in order to continue providing the company with funds needed for financing growth. Without shareholders and their equity capital, companies would have to be wholly debt financed, and therefore they must create as high a value as possible to their shareholders. Focusing on profit alone is not sufficient. A focus on the ability to create and enhance a free cash flow in the long run is the main objective. Old traditional measures are criticised for having low correlation with shareholder value creation. Therefore, new methods are needed to measure the creation of shareholder value. The aim of this dissertation is to study the role of Value Drivers, as presented in the Shareholder Value Analysis Model, in creating shareholder value. This has been achieved through interviews conducted with non-bank Maltese listed companies to determine which value drivers are considered as crucial in value creation, and how they are being planned and managed. The study has shown that value drivers are not identical for every company. The relative importance given to each driver changes depending on the situation being faced by the company.