Previous ed. published as Value-based management. c2000.

Includes bibliographical references (p. 187-191) and index.

Part I: Value-Based Management, Corporate Social Responsibility, and the Purpose of the Corporation -- 1 The Purpose of a Corporation -- Adam Smith and the Invisible Hand -- A Stakeholder Perspective -- Value(s)-Based Management: A Middle Ground -- Summary: Creating Firm Value—Think Value(s)-Based Management -- Appendix 1A: John Mackey and Milton Friedman on the Goal of the Firm -- 2 The Elements of Value-Based Management -- Wealth Creation Is Not Universal -- The Proper Design of a V[sub(s)]BM Program -- Alternative Valuation Paradigms: Earnings versus Discounted Cash Flow -- Connecting Business Strategies with the Creation of Firm Value -- Summary -- 3 The Need to Measure What You Want to Manage -- The Need for a Single Metric -- Total Shareholder Return -- Total Market Value -- Accounting-Based Metrics -- Think Economic Profits, Not Accounting Profits -- Summary -- Appendix 3A: Accounting versus Economic ROIC -- Appendix 3B: More Problems with Accounting-Based Metrics -- Part II: The Finer Details of Value-Based Management and Corporate Social Responsibility -- 4 Free Cash-Flow Valuation: The Foundation of Value-Based Management -- The Beginning for Value-Based Management: Free Cash Flows -- Free Cash Flow and Firm Valuation -- Determining the Discount Rate -- The Value Drivers: Digging Deeper -- Summary -- 5 Pick a Name, Any Name: Economic Profit, Residual Income, or Economic Value Added -- The Fundamental Concept: Residual Income or Economic Profits -- A Comparison of the Residual Income and Free Cash Flow Approaches -- “Fine-Tuning” Residual Income with EVA -- More Than a Financial Exercise -- Summary -- Appendix 5A: The Equivalence of the Residual Income and Discounted Dividends Valuation Approaches -- Appendix 5B: An Illustration of the Computation of EVA -- Appendix 5C: Performance Evaluation Using CFROI -- 6 Corporate Social Responsibility: Putting the S in Value(s)-Based Management -- The Moral Argument for CSR -- The Economic Argument for CSR -- CSR within a VBM Framework: The Academic Evidence -- Driving the Value Drivers -- Summary -- Part III: VBM Applications -- 7 Project Evaluation Using the New Metrics -- Example Capital Investment Project -- Traditional Measures of Project Value -- Using EVA to Evaluate Project Value Creation -- Fixing the Problem -- Unequal Cash Flows and Positive NPV -- Summary -- Appendix 7A: The Equivalence of MVA and NPV -- 8 Incentive Compensation: What You Measure and Reward Is What Gets Done -- All-Too-Common Mistakes -- Creating a Culture of Ownership -- Determining a Firm’s Compensation Policy -- Single-Period Performance Measures and Managerial Incentives -- Managerial Decision Horizon and the Use of EVA -- Extending Managerial Horizons -- How Should Employee Compensation Be Structured? -- Fairness as an Additional Characteristic of a Firm’s Compensation Policy -- Summary -- Appendix 8A: Whole Foods Market Executive Compensation Discussion and Analysis -- Part IV: Lessons We Have Learned -- 9 Lessons Learned -- VBM Studies Based on Archival Data -- VBM Studies Based on Survey Data -- More Recent Survey Evidence -- Current CSR Research -- Summary -- Epilogue: Where We Are Now