Why is Fundamental Value so Fundamental to Directors?

Adrian Buckley

European Management Journal, 2003, vol. 21, issue 5, 635-646

Abstract: Fundamental value for a firm is that range of value based upon the present value of estimated future cash flows. Fundamental value and market value may differ. Where market value is above fundamental value, the firm may create wealth from judiciously timed equity issues to parties who are currently non-shareholders, particularly in takeover situations. Where market value exceeds fundamental value, return of surplus funds should logically be via a special dividend rather than a share repurchase. Where fundamental value per share exceeds market value per share, the firm may create shareholder value for continuing equity investors by timely buybacks.

Keywords: Fundamental; value; Intrinsic; value; Market; value; Financing; Takeovers; Share; repurchases (search for similar items in EconPapers)
Date: 2003
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0263237303001129
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:eurman:v:21:y:2003:i:5:p:635-646

Ordering information: This journal article can be ordered from
http://www.elsevier.com/wps/find/journaldescription.cws_home/115/bibliographic
http://www.elsevier. ... me/115/bibliographic

Access Statistics for this article

European Management Journal is currently edited by Michael Haenlein

More articles in European Management Journal from Elsevier
Bibliographic data for series maintained by Catherine Liu ().