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Shareholder Value > Conclusions of all articles > Flashcards

Conclusions of all articles Flashcards

1
Q

Burggraeve CH 6 - what is the purpose of MFI streams

A
  • broaden scope of marketing
  • include investors as relevant stakeholders
  • demonstrate that marketing matters
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2
Q

Burggraeve CH 6 - top 3 positive marketing drivers

A
  • innovation
  • customer satisfaction
  • customer-based brand equity
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3
Q

Burggraeve CH6 - top 3 negative marketing drivers

A
  • negative earned social media sentiment
  • mypoic management actions
  • product recalls
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4
Q

Webster (1992) - characteristics new organizational forms

A
  • flexibility
  • specialization
  • relationship management
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5
Q

Webster (1992) - types of relationships and alliances (6)

A
  • transaction (1-time)
  • repeated transactions (brand loyalty & repeated purchase)
  • long-term relationships (price battle)
  • mutual, total-dependence buyer-seller relationship (efficient long-term relationships)
  • strategic alliances (new ventures, same strategic goal)
  • networks (multiple allainces)
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6
Q

Webster (1992) - marketing strategy at 3 levels

A
  • corporate (what will we do and not do - what are the needs of customers, promote customer orientation, develop VP)
  • business (how to compete - marketing segmentation, market targeting, positioning)
  • operating level (4p’s)
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7
Q

Webster (1992) - conclusion/main takeaways

A
  • marketing as a distinct management function is responsible for being the expert on the customer and keeping the rest of the network informed about the customer
  • the focus on customer value and relationship management may result in stronger coordination of product sales
  • and end of impersonal mass communication and the beginning of personal communication
  • moving from microeconomic model to political and organizational model
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8
Q

Day & Fahey (1998) - value-based planning approaches

A
  • if the market value of the common stock exceeds the book value of the firm, the firm created value
  • current stock prices represent value derived from the past as well as prospective investments
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9
Q

Day & Fahey (1998) - valuation premises that should be satisfied

A
  • business managers can and will accurately forecast the value creation of their strategic choices relative to the baseline forecast
  • the shareholder value yardstick can be applied to all strategic decisions that have CF implications
  • the stock market will recognize and reward strategies that enhance shareholder value
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10
Q

Day & Fahey (1998) - why stakeholders and managers do not come to the same outcomes, regardless of information assymetry

A
  • reliability of information
  • value of intangibles
  • value of interdependence among business units
  • degree of risk
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11
Q

Day & Fahey (1998) - conclusion

A
  • shift from project to strategies is aided by value-based planning methods
  • value-based decision quality depends on the input assumptions (residual value and risk)
  • value-based decision shouldn’t be a tool but should be used as defensible framework for sensitivity analysis
  • understanding the competitive situation is as important
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12
Q

Edeling et al (2021) - main findings

A

new-product introductions has the strongest effect on customer satisfaction, brand equity, perceived product quality
- avoid myopic management, products recalls, and negative social media coverage

four major topic areas
- digital marketing and firm value
- doing good vs. doing well
- mechanisms of firm-value effects
- feedback effects

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13
Q

Edeling et al (2021) - digital marketing and firm value

A
  • online communication actions –> positive effect on firm value
  • earned social media is a driver of firm value –> potential asymmetries
  • data breaches –> severe negative firm-value effects on local firms
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14
Q

Edeling et al (2021) - tradeoffs between doing good and doing well

A
  • positive changes in customer satisfaction –> positive shareholder effects
  • employee satisfaction –> positive effect on firm value
  • evidence of investing in CSR is highly mixed
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15
Q

Srivastava et al (1998) - how do market-based assets increase shareholder value?

A
  • enhancing CF
  • lower volatility and vulnerability
  • increase residual value of CF
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16
Q

Srivastava et al (1998) - asset definition

A
  • physical, organizational, human attribute
  • enables firm to generate and implement strategies
  • improve efficiency and effectiveness in the marketplace
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17
Q

Srivastava et al (1998) - what are market-based assets

A
  • external to firm
  • intangible
  • don’t appear on the balance sheet
  • can be relational and intellectual
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18
Q

Srivastava et al (1998) - when do assets contribute to value generation

A
  • convertible
  • rare
  • imperfectly imitable
  • no perfect substitutes
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19
Q

Srivastava et al (1998) - how do market-based assets accelerate CF

A
  • increasing responsiveness to marketing activity
  • positive brand attitude and brand awareness
  • quicker response to new product launches
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20
Q

Srivastava et al (1998) - how do market-based assets impact vulnerability and volatility CF

A
  • more stable CF
  • customer satisfaction, loyalty and retention increase
  • reduce unpredictability CF
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21
Q

Srivastava et al (1998) - how do market-based assets impact residual value of CF

A

residual value is closely linked to size and quality of the customer base

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22
Q

Burggraeve CH 1-3 - sell side analysts

A
  • individual
  • large customer base
  • short-term focus
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23
Q

Burggraeve CH 1-3 - buy side analysts

A
  • institution
  • increase value of fund
  • long-term focus
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24
Q

Lukas et al (2005) - shareholder value approach

A
  • utilization of shareholder value analysis
  • create and utilize marketing assets
  • generate future CF with positive NPV
  • long-term perspective
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25
Q

Lukas et al (2005) - why are earnings a poor measure of performance

A
  • easily manipulated
  • exclude investments
  • marketing as expense
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26
Q

Lukas et al (2005) - contributions shareholder value to marketing

A
  • properly define objectives
  • language for integrating marketing more effectively with other functions
  • demonstrate importance of its assets
  • protects marketing budgets from being cut
  • puts marketing in a pivotal role in the strategy formulation process (competitive advantage)
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27
Q

Lukas et al (2005) - downside shareholder value approach

A
  • different judgements lead to different estimates
  • depends on NPV and terminal value (difficult measure)
  • underestimate value of new ventures (high risk)
  • no business strategies
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28
Q

Lukas et al (2005) - conclusion

A

shareholder value approach empowers marketing to assert its role within the organization in ways meaningful to execute management

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29
Q

Srinivasan & Hanssens (2009) - Fama-French model

A
  • CAPM + size risk + value risk
  • additional returns investors can expect to receive
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30
Q

Srinivasan & Hanssens (2009) - Four-Factor model

A
  • CAPM + size risk + value risk + momentum
  • based on cross-sectional inferences
  • may be subject to omitted variables
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31
Q

Srinivasan & Hanssens (2009) - event studies

A
  • stock return model (single equation)
  • persistence modeling (multiple equations)
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32
Q

Srinivasan & Hanssen (2009) - risk types

A
  • systematic risk (related to variability through the 4 factors)
  • idiosyncratic risk (firm specific, 80% of total risk)
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33
Q

Srinivasan & Hanssen (2009) - main findings

A
  • marketing asset metrics: brand equity, customer satisfaction, customer metrics and product quality all are positively related to stock returns.
  • marketing action metrics: advertising, distribution channels and new products are positively related to stock returns.
  • price promotions are positively related to stock returns only in the short-run. In the long-run they are negatively related.
34
Q

Homburg et al (2020) - marketing excellence old definition

A
  • strategy-like activity or process
  • concerns the firm’s superior ability to perform essential customer-facing activities
  • during marketing-strategy process
35
Q

Homburg et al (2020) - marketing excellence new definition

A
  • type of firm strategy
  • focused on achieving organic growth
  • by executing the marketing ecosystem priority, end-user priority and the marketing agility priority
36
Q

Burggraeve CH 10-11 - Pricing power (why)

A

increase WTP

37
Q

Burggraeve CH 10-11 - purpose (why)

A

clearly articulate existential reason of being towards all stakeholders

38
Q

Burggraeve CH 10-11 - marketing organization (who)

A

marketing should be a line function

39
Q

Burggrave CH 10-11 - marketing expertise (who)

A
  • attract best marketing talent
  • be known for marketing training ground of professional
40
Q

Burggraeve CH 10-11 - brand health (what)

A
  • brand perception
  • brand rating
41
Q

Burggraeve CH 10-11 - value propositions (what)

A
  • benefits
  • price
  • reference
42
Q

Burggraeve CH 10-11 - way of marketing (how)

A

strategic tools and processes used across brands and regions

43
Q

Burggraeve CH 10-11 - excellence culture (how)

A
  • systematic learning and continuous improvement
  • driven to be the best
44
Q

Koller (1994) - 4 essential management processes that govern the adoption of VBM

A
  • develop strategy to maximize value
  • translate strategy into short-term and long-term performance targets defined by key drivers
  • develop action plans and budgets to define the steps
  • put performance measurements and incentive systems in place
45
Q

Koller (1994) - Key principles VBM

A
  • tailor performance measurement to business unit
  • link performance measure to short- and long run targets
  • combine financial and operating performance
  • identify performance measures that serve as early warning indicators
46
Q

Rappaport (2005) - why are short-term earnings important

A
  • DCF analysis as model for valuing assets
  • information gap
  • substantial weight for short-term performance
  • reputation
  • most widely accepted metric
  • short holding of stocks
47
Q

Rappaport (2005) - conclusion

A
  • root cause of corporate scandals is short-term performance obsession
  • high working capital is preferred
  • low working capital is cool, but fragile
  • all DCFs together is value of the firm created by shareholders
48
Q

Bacidore et al (1997) - firm value consists of 2 components…

A
  • physical assets in place
  • NPV of current and future investment opportunities
49
Q

Bacidore et al (1997) - effect of past stock returns on R&D and M&A

A
  • increase in M&A budget
  • decrease in R&D budget
50
Q

Bacidore et al (1997) - effect of stock volatility on R&D and M&A

A
  • increase M&A budget
  • decrease R&D budget
51
Q

Bacidore et al (1997) - conclusion

A

NOPAT should be adjusted by the firm’s NAV which presents the net value of an entity and is calculated as the total value of the entity’s assets minus the total value of its liabilities.

52
Q

Hogan et al (2002) - CLV model use…

A

assess the value of customer assets
- does not account for behavioral dynamics, competitive effects, social effects and effects of the product lifecycle

53
Q

Hogan et al (2002) - extending the model for

A
  • risk individual customers
  • social effects
  • competitive effects
  • individual customer profitability
  • product lifecycle
  • managerial flexibility
54
Q

Hogan et al (2002) - conclusion

A
  • true value of customers to the firm needs to be applied to situations in which the basic model is unsuitable
  • link customer firm’s actions, customer relationships and long-term profitability of the firm
55
Q

Kumar and Petersen (2005) - 7 tactics

A
  • choose the right customers (who is most valuable, CLV)
  • contact customers (right channel, right amount of resources)
  • right message at the right time
  • multichannel shopping
  • manage high-cost customers (not worth chasing)
  • find and keep the right customers
  • manage loyalty and profitability
56
Q

Kumar and Petersen (2005) - data requirements

A
  • customer-level
  • detailed transactional information
  • sufficient period of time (at least 2/3 years)
  • marketing touch information
57
Q

Kumar and Petersen (2005) - conclusion

A

the seven tactics have been directly linked to firm performance and offers ways to use resources efficiently and effectively to streamline marketing efforts

58
Q

Fornell et al (2006) - investors may react negatively to CS

A
  • too much surplus to customers
  • improving CS might be questionable
  • managerial cost might be too high
  • reverse causality effect (unsatisfied customers have left firm)
  • issue timing and expectations
59
Q

Fornell et al (2006) - conclusion

A
  • firms with high CS generate positive abnormal returns
  • news about CS does not affect stock prices
  • CS is strongly related to economic value
60
Q

Aksoy et al (2008) - conclusion/findings

A
  • portfolio of stocks consisting of firms with high levels and positive changes in customer satisfaction will outperform the other portfolios (low level negative changes, low level positive changes, high level negative changes)
  • stock market undervalues positive satisfaction but adjusts in the long run
61
Q

Aksoy (2008) - why investors don’t use customer satisfaction

A
  • little additional information
  • information is not valued
  • short-term focus
  • skeptical about it’s impact on firm performance
62
Q

Graham et al (2005) - goal

A

find what factors motivate firms to exercise discretion and sacrifice economic value to manage reported earnings

63
Q

Graham et al (2005) - 4 key insights with regards to corporate financial reporting

A
  • accounting earnings matter more to managers than CF for financial reporting
  • managers are interested in meeting or beating earnings benchmarks to influence stock prices and their own welfare
  • holding CF constant, managers care about smooth earnings
  • managers are willing to sacrifice economic value to manage financial reporting perceptions
64
Q

Graham et al (2005) - 4 causes for focussing on EPS

A
  • need for a simple metric which is easy to understand and comparable
  • broadest distribution and coverage by media
  • easier to predict the future value based on one metric than based on multiple metrics
  • firm’s progress is analyzed based on EPS
65
Q

Graham et al (2005) - conclusion

A
  • earnings are perceived of most important metric
  • short-term benchmarks are the main focus
  • more importance in explaining current numbers than on vision of firm’s future
  • most EM is achieved via real actions rather than accounting manipulations
    managers prefer smooth earnings (easier to predict)
66
Q

Graham et al (2005) - 4 reasons why managers meet or beat benchmarks

A
  • built credibility with capital market
  • maintain/increase stock price
  • improve the external reputation of the management team
  • convey future growth prospects
67
Q

Graham et al (2005) - 3 reasons for voluntary disclosure

A
  • promote a reputation for transparent reporting
  • reduce information risk
  • adres deficiencies of mandatory reporting
68
Q

Graham et al (2005) - biggest barrier to voluntary disclosure

A

fear of setting a disclosure precedent which is difficult to maintain in the future and gives information to competitors

69
Q

Graham et al (2005) - managers’ reasons to worry about short-run stock prices

A
  • fear about losing job when stock price falls
  • skill-level assessed based on stock price
  • equity analysts which cover the stock
  • avoid embarrassing inquisitions by stock analysts in conference calls when price drops
70
Q

Wies et al (2019) - main findings

A
  • firms increase advertising investments following shareholder complaints
  • advertising investment response mitigates postcomplaint decline in firm value
  • firms are more likely to increase advertising investments when shareholder complaints are submitted by institutional investors, pertain to non-financial concerns and relate to topics that receive high media attention
71
Q

Wies et al (2019) - impact of shareholder complaints

A
  • reputational damage
  • undermine investor confidence
  • divert management from running the business
72
Q

Aspara and Tikkanen (2010) - findings

A

the consumers showed willingness to invest in a chosen stock beyond its expected financial returns/risk
two variables are found to elicit willingness to invest in a company’s stock beyond its financial returns:
- the personal relevance (activities or areas of interest; ideas or ideals) represented by the company’s products
- the individual’s affective evaluation of the company’s product brand

73
Q

Hoffmann et al (2011) - 5 relational dimension composing IR management

A
  • cooperative relationship towards stakeholders
  • strategic evaluation mode, long-term opportunities
  • trust, willingness to be vulnerable
  • commitment, relational continuity
  • weak form reciprocity
74
Q

Hoffmann et al (2011) - Increase IR management results in favorable capital market outcomes…

A
  • reduce cost of capital
  • improve stock liquidity
  • increase analyst coverage
  • less shareholder activism
75
Q

Mishra and Modi (2016) - stakeholder theory

A
  • CSR is financially valuable
  • positive effect on stakeholders
76
Q

Mishra and Modi (2016) - RBV theory

A

CSR brings competitive advantage

77
Q

Mishra and Modi (2016) - Agency theory

A
  • CSR regulations have high costs
  • lower shareholder value
78
Q

Mishra and Modi (2016) - 6 types of CSR

A
  • environment
  • products
  • diversity
  • corporate governance
  • employees
  • community
79
Q

Mishra and Modi (2016) - conclusions

A
  • CSR no direct impact on shareholder wealth
  • marketing capability mitigates the effect of CSR on shareholder wealth
  • marketing capability also direct effect on shareholder wealth
  • community CSR no effect
80
Q

Umashankar (2022) - reasons for M&A

A
  • obtain assets
  • grow
  • reduce costs
  • stave of competition
81
Q

Umashankar (2022) - conclusion

A
  • M&As cause decline in customer satisfaction, outweighing any gain in firm efficiency
  • executive attention to customers during M&As is essential
  • during M&As attention is mostly on financial issues, risking customer relationships
  • M&As have short-term positive financial effects but long-term negative financial effects

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