article thumbnail

What Is Capital Budgeting?

Andrew Stolz

The net present value of an asset (NPV). Calculating the payback period would help the firm know how long it is going to take to recover the cost of an investment. Throughput analysis looks at the firm as a whole. This process helps the management invest in the assets that can maximize the firm’s value.

article thumbnail

Pay for Prudence

Reynolds Holding

As in other industries, a bank’s shareholders and board of directors provide incentives for management to maximize firm value. While bank shareholders may prefer risky actions that are likely correlated with increases in shareholder value, they must also gauge the likelihood of regulatory intervention.

Banking 52
Insiders

Sign Up for our Newsletter

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

article thumbnail

ESG Valuation Considerations – Top Down or Bottom Up?

Value Scope

How do you justify making substantial investments and fundamental changes to corporate structures and culture without empirical evidence that it will make a direct impact on shareholder value, total shareholder return, net present value, and individual rates of return? Do ESG programs impact firm value?

article thumbnail

Do Hostile Takeover Threats Matter?

Reynolds Holding

Second, managers acting on behalf of shareholders might reject projects with positive net present values if they feel that most of gains will flow to debtholders. This is referred to in the literature as the underinvestment problem and reflects poor investment decisions made by the firm.

article thumbnail

ESG A Valuation Framework

Value Scope

How do you justify making substantial investments and fundamental changes to corporate structures and culture without empirical evidence that it will make a direct impact on shareholder value, total shareholder return, net present value, and individual rates of return? . Do ESG programs impact firm value?