Growth, Profitability, And Shareholders Value Creation

Associate corporate performance and shareholder value creation with growth in earnings or sales has been the modus Operandi in he investment industry. It has greatly influenced managerial compensation schemes and portfolio decisions. I shed light on the relationship between growth and performance by addressing two questions. First, what is the relationship between corporate profitability metrics, such as economic value added, and the company's earnings or sales growth rate? Second, does maximizingCorporate profitability necessarily enhance shareholder value? Using Multivariate analysis, we show that, although the corporate profitability measures generally rise with earrings and sales growth, an optimal Point exists beyond which further growth destroys shareholder value and adversely affects profitability. Analyze the above relationships is to know how to create values for shareholders now in our country.The dissertation, with 5 chapters, and more than 35,000 words, is composed of three major parts: theory study, China's quoted companies analyzing and solution research.The first part as the first chapter, is theory research. Because I mainly use the EVA as the metric of shareholder value creation, and the history of EVA in China isless than 4 years, I introduce the computation method, advantages and disadvantages.The second part is China's quoted companies analyzing, including the second and third chapter. This part is the emphasize of the dissertations. I use the univariate and multivariate analysis methods to build a model to analyze relationship of the metrics mentioned above, and then come to conclusions. The third chapter is to compensate the shortage of data years, which analyze 3 years of China's quoted companies as a whole.The last part includes the fourth and fifth chapter. In the fourth chapter, I chose 4 quoted companies as cases to analyze the EVA from 4 aspects. In the last chapter, I give some solutions.The dissertation has use the new metric EVA, which is use only less than 20 years since it was invented in America. The application is much shorter in China, and the relative research is shortage as well. I hope this paper can supply a gap.