Getting an idea ofHow to value investment opportunities?What drives shareholder value and how to reflect this in corporate planning?How to measure the shareholder value that was/will be generated in a single period?How to affect managerial decisions in direction of shareholder value?Further aspects, for example, criticisms of value based management, shareholder vs. stakeholder value,…

Lecture, discussion and students' presentation.

The key issue of value-based management is to prioritize those decisions which contribute to firm value. Besides a certain managerial mind-set value-based management also comprises various metrics (like economic value added®) and instruments directed to measure and deliberately affect firm value. The course provides an introduction to value-based management including value-based metrics and value-based management compensation. In the course, the key features of value-based management are analysed and its consequences are discussed.Idea and background of value-based managementBasic principles of valuation, esp. net Present Value and discounted cash flowPrinciples of residual income-based metricsExamples of residual income-based metrics (economic value added, cash flow return on investment)Value-based management compensationCritical assessment of value-based managementShareholder value vs. stakeholder value

Young, S. David; O’Byrne, Stephen F.: EVA and Value-Based Management: A Practical Guide to Implementation, New York et al. 2000 (McGraw-Hill) Brealey, Richard A.; Myers, Stewart C; Allen, Franklin: Principles of Corporate Finance, Maidenhead et al. in the current edition (McGraw-Hill Education)

Short oral presentation (20 min.) and a short paper of 6 pages at maximum (not including index, references, appendix...).

To each examinee a topic related to Value Based Management will be assigned.The oral presentation is intended to give a short overview about the key components of the respective topic.The paper should provide an short overview of the topic and a discussion of a selected aspect within that topic.

Attendance of at least 75%.For the presentation and the paper:correctness and clarity (i.e., are the key ideas of the topic correctly and concisely captured and presented).For the paper additionally:Elaboration (clarity, balance of arguments) of how the respective aspects is discussed.