Shareholder value creation in Europe. Eurostoxx 50: 1997-2003

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/547, IESE Research Papers from IESE Business School

Abstract: 2003 was a good year for the shareholders of the companies in the Euro Stoxx 50: the shareholder value creation of these 50 companies was €150,016 million. The companies that created most value for their shareholder were Siemens (€18,778 million), Telefonica (15,382) and BSCH (12,443). The companies that destroyed most shareholder value were Nokia (-€12,051 million), L'Oreal (-8,089) and Ahold (-5,427). None of the Spanish companies in the Euro Stoxx 50 destroyed shareholder value in 2003. Shareholder value destruction in the three-year period 2001-2003 was €-1.75 trillion. The market value of the 50 companies was €1.65 trillion in 2003, and €1.4 trillion in 2002. We also calculate the created shareholder value of the 50 companies during the seven-year period 1997-2003. Siemens was the top shareholder value creator and Nokia the top shareholder value destroyer during the seven-year period. A portfolio long in the companies that entered the index and short in the companies that abandoned the index had on average a 6% return in the 20 days prior to the index recomposition and a 7% return in the 20 days after the index recomposition. In 2003, the Euro Stoxx 50 was much more volatile than the S&P 500 or the Dow Jones.

Keywords: shareholder value creation; created shareholder value; shareholder value added; shareholder return; required return equity (search for similar items in EconPapers)
JEL-codes: G12 G31 M21 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2004-03-12
New Economics Papers: this item is included in nep-cfn and nep-fmk
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