EuroStoxx 50: 1997-2004. Shareholder value creation in Europe

Pablo Fernandez and Alvaro Villanueva
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Alvaro Villanueva: IESE Business School, Postal: Research Division, Av Pearson 21, 08034 Barcelona, SPAIN

No D/583, IESE Research Papers from IESE Business School

Abstract: 2004 was a good year for the shareholders of the companies in the Euro Stoxx 50: the shareholder value creation of these 50 companies was €42,880 million. It was not as good as 2003, however, when their value creation reached slightly over €160,000 million. The companies that created most value for their shareholders were Enel (€13,364 million), ENI (11,855) and TIM (9,891). The companies that destroyed most value were Nokia (-€15,239 million), L'Oréal (-9,095) and Philips (-7,823). In 2004, the Euro Stoxx 50 was much more volatile than either the S&P 500 or the Dow Jones. Shareholder value destruction in the three-year period 2002-2004 was €-0.9 trillion. The market value of the companies included in the Euro Stoxx 50 was €1.5 trillion in 2004 and €1.4 trillion in 2003. We also calculate the created shareholder value of the 50 companies during the seven-year period 1997-2004. ENI was the top shareholder value creator and Vivendi, the top shareholder value destroyer during that period. A portfolio long in the companies that entered the index and short in the companies that abandoned the index had on average a 7.2% return in the 20 days prior to the index recomposition and a 2.3% return in the 20 days after the index recomposition.

Keywords: shareholder value creation; created shareholder value; shareholder value added; shareholder return; required return to equity (search for similar items in EconPapers)
JEL-codes: G12 G31 M21 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2005-02-28
New Economics Papers: this item is included in nep-eec, nep-fin and nep-rmg
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