THE INFLUENCE OF THE COSTS OF OWN AND BORROWED CAPITAL ON THE VALUE NEWLY CREATED BY AN ECONOMIC SOCIETY

Lucian-Ion Medar and Marian Catalin Corici
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Lucian-Ion Medar: CONSTANTIN BRANCUSI UNIVERSITY OF TARGU JIU

Annals - Economy Series, 2022, vol. 6, 77-83

Abstract: The influence of the realization of economic value determined by the cost of equity capital and borrowed capital is in the permanent attention of shareholders and all participants in the financial exercise of an enterprise. Shareholders are directly interested in the value creation mechanism as the remuneration they expect for the capital invested and the risk assumed. The strategic object of increasing the performance of the organization and implicitly of the newly created value satisfies the immediate interest of the managers and of the other employees, constituting the guarantee of maintaining the jobs. Salary packages often also include clauses regarding obtaining a remuneration from the company's profit or participating in its share capital. At the level of the national economy, value creation means the efficient use of the national economic potential and on this basis the increase of the gross domestic product that contributes to the increase of social welfare.

Keywords: social value; organization; economic value; shareholders; profit; economic analysis (search for similar items in EconPapers)
Date: 2022
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