shared value model

Examples of shared value model in the following topics:

• The Financial Value of Social Responsibility

  • An organization's CSR practices might also increase employee loyalty, which lowers the cost of turnover; it also helps attract potential employees willing to work for less for a company whose values they share.
  • Harvard professors Michael Porter and Mark Kramer introduced the notion of "creating shared value" (CSV) as a way of thinking about the benefits of corporate social responsibility.
  • By focusing on creating shared value, an organization helps to shape the context in which it competes to its advantage.
  • In this way, the shared value model takes a long-term perspective on the financial benefits of corporate social responsibility.
  • Socially conscious investors may prefer to own shares of a company that demonstrates good CSR, which can lead to higher share prices.

• Maximizing Shareholder and Market Value

  • The idea of maximizing market value is related to the idea of maximizing shareholder value, as market value is the price at which an asset would trade in a competitive auction setting; for example, returning value to the shareholders if they decide to sell shares or if the firm decides to sell.
  • There are many different models of corporate governance around the world.
  • The Anglo-American (US and UK) "model" tends to emphasize the interests of shareholders.
  • Additionally, short-term focus on shareholder value can be detrimental to long-term shareholder value.
  • Maximizing shareholder and market value is, for some, one of the goals of financial management.

• Basic Components of Asset Valuation

  • Assets are valued using absolute value, relative value, or option pricing models, which require different inputs.
  • Absolute value models that determine the present value of an asset's expected future cash flows.
  • These kinds of models take two general forms: multi-period models such as discounted cash flow models or single-period models such as the Gordon model.
  • Relative value models determine value based on the observation of market prices of similar assets.
  • The most common option pricing models are the Black–Scholes-Merton models and lattice models.

• Finding an Equilibrium Exchange Rate

  • When the domestic currency has a high value, its exports are expensive.
  • If the currency's value is low, imports can be too expensive though exports are expected to rise.
  • Purchasing power parity is a way of determining the value of a product after adjusting for price differences and the exchange rate.
  • The increase in capital flows has given rise to the asset market model.
  • They include investments, such as shares of stock that is denominated in the currency, and debt denominated in the currency.

• Change in Household Size

  • Household models include the single family and blended family home, shared housing, and group homes for people with special needs.
  • Household models in Anglophone culture include the single family and varieties of blended families, shared housing, and group homes for people with support needs.
  • People who live together in a shared house are called roommates.
  • In both developed and developing countries, shared housing is an increasingly popular household model.
  • As the value of urban land has increased, many of these properties have been renovated and made available at higher prices.

• Defining Values

  • A person will filter all of these influences and meld them into a unique value set that may differ from the value sets of others in the same culture.
  • Modeling period (ages eight to thirteen): The individual's value template is sculpted and shaped by parents, teachers, and other people and experiences in the person's life.
  • This person may therefore be a more efficient employee and a more positive role model to others than an employee with opposite values.
  • Conflict may arise, however, if an employee realizes that her co-workers do not share her values.
  • However, hiring for values is at least as important.

• Explanation of Clarifying

  • These skills have been modeled and practiced externally.
  • They are also becoming more and more comfortable sharing things that they do not know as well as things that they do know.
  • Through the collaborative process of sharing questions students find that they all have information to share that sheds light on their understanding of what they are reading.
  • Much of this knowledge comes from their individual backgrounds and prior reading experience, so individuals find value in themselves (Allen, 2003).
  • Identifying words and concepts that are not fully understood has become a valued skill rather than a perceived weakness.

• Residual Dividend Model

  • The Residual Dividend Model first uses earnings to finance new projects, then distributes the remainder as dividends.
  • The Residual Dividend Model is a method a company uses to determine the dividend it will pay to its shareholders.
  • This model can lead to unpredictable and inconsistent dividend returns for the investor.
  • The Residual Dividend Model is an outgrowth of The Modigliani and Miller Theory that posits that dividends are irrelevant to investors.
  • It goes on to say that dividend policy does not determine market value of a stock.

• Discounted Dividend vs. Corporate Valuation

  • The dividend discount model values a firm at the discounted sum of all of its future dividends, and does not factor in income or assets.
  • The dividend discount model (DDM) is a way of valuing a company based on the theory that a stock is worth the discounted sum of all of its future dividend payments.
  • In other words, it is used to value stocks based on the net present value of the future dividends.
  • b) If the stock does not currently pay a dividend, like many growth stocks, more general versions of the discounted dividend model must be used to value the stock.
  • One common technique is to assume that the Miller-Modigliani hypothesis of dividend irrelevance is true and, therefore, replace the stocks's dividend D with E earnings per share.

• Overview of Warrants

  • When the warrant issued by the company is exercised, the company issues new shares of stock, so the number of outstanding shares increases.
  • Unlike common stock shares outstanding, warrants do not have voting rights.
  • There are various methods of evaluating warrants, the most popular being the Black-Scholes evaluation model [see section on Options].
  • Time value: Time value can be considered as the value of the continuing exposure to the movement in the underlying security that the warrant provides.
  • For example, put warrants allow the owner to protect the value of the owner's portfolio against falls in the market or in particular shares.