Outperform with Expectations-Based Management: A State-of-the-Art Approach to Creating and Enhancing Shareholder Value - Hardcover

Copeland, Tom; Dolgoff, Aaron

Hardcover

ISBN 10: 0471738751 ISBN 13: 9780471738756

Publisher: Wiley, 2005

Synopsis

CEOs and managers live and die by delivering superior performance to shareholders. This is why expectations-based management has been developed. Outperform with Expectations-Based Management (EBM) introduces a revolutionary new performance metric that links performance standards, performance measurement, and the achievement of performance.

It's easy to say that if a CEO can get performance measurement right, then performance improvement will follow. But what is the "right" measure of performance, and how do you use it to improve performance? Authors Tom Copeland and Aaron Dolgoff answer these questions and many more, as they show you how to find the measure of performance that has the strongest link to the creation of wealth for the owners of both public and private companies. They answer the puzzle of why growth in earnings is not correlated with shareholder returns and explain the under- and over-investment traps. And they explain how clear communications to investors and managers alike improve value.

The bottom line is that share prices go up when companies exceed expectations -- short-term and long-term -- of income statement and balance sheet performance and daily operating value drivers. Gain a complete understanding of EBM and discover how to do this, and much more, while staying competitive in an unforgiving business environment.

About this title

About the Author

TOM COPELAND, PHD, is Managing Director Emeritus of Corporate Finance at The Monitor Group, Inc., a top management consulting company, and Senior Lecturer at MIT's Sloan School of Management. He has consulted at over 200 companies in thirty-four countries and is a leading authority on valuation. He coauthored Valuation with Tim Koller and Jack Murrin, and Real Options: A Practitioner's Guide with Vladimir Antikarov (both from Wiley). Copeland received a BA in economics from The Johns Hopkins University, an MBA in finance from the Wharton School, and a PhD in applied economics from the University of Pennsylvania. He has also taught at the Anderson School of Management, UCLA; at the Stern School at NYU; and at Harvard Business School.

AARON DOLGOFF is an Associate Principal in the Finance practice of CRA International. He works on litigation and business-consulting matters requiring specialized finance expertise. Dolgoff's experience spans a range of industries, including pharmaceuticals, agribusiness, truck manufacturing, office supplies, healthcare services, and consumer goods. He received a BS in economics from the Wharton School and an MA in international relations and economics from The Johns Hopkins University.

From the Back Cover

PRAISE FOR Outperform with Expectations-Based Management

"This is a stimulating book that places traditional financial management in an expanded framework. It demonstrates that uncertainty and the revisions of market expectations require a new orientation for management decision-making. It contains many conceptual extensions of traditional ideas. The numerous examples of actual companies illuminate the applicability of the new theories explained. This book has many important and exciting ideas that can improve management decisions and performance."
J. Fred Weston, Distinguished Professor of Finance, Anderson School of Management, UCLA

"What drives shareholder returns is of immense interest to managers and investors. Bringing expectations squarely into the picture through Expectations-Based Management (EBM) sorts out the issues practitioners and theorists have had with earnings and cash flow measures. The book is a fine companion to Tom Copeland's path-breaking work in corporate finance, valuation, and real options."
Rob McLean, Dean and Director, Australian Graduate School of Management

"This book is a tour de force critique of the way we measure corporate performance. And it offers a sound remedy that for the first time reflects the fact that value creation is significantly about exceeding investor expectations. Well written and amply researched and illustrated, Outperform with Expectations-Based Management will sharpen the way you judge financial results and the managers who produce them. This is a must-read for thoughtful investors, directors, CEOs, students, and all aspirants to superior performance."
Robert F. Bruner, Distinguished Professor of Business Administration, Darden Graduate School of Business Administration, University of Virginia

From the Inside Flap

In today's unforgiving business environment, value is based on expectations. Companies whose performance exceeds expectations increase shareholder value and wealth, while companies that fail to meet expectations struggle to stay competitive.

Financial professionals Tom Copeland and Aaron Dolgoff have long realized this relationship. That's why they've created Expectations-Based Management (EBM) a management tool that links performance measurement of businesses, and therefore management decisions and incentive design, directly to the total return to shareholders (TRS).

Now, in Outperform with Expectations-Based Management , Copeland and Dolgoff show executives and managers how to use this proven approach to create and enhance shareholder value. But, this book is not just for professionals that play a fundamental role in setting expectations. It's also for investors who believe in using fundamental information to set their expectations for company performance, as well as analysts who forecast financial results and make investment recommendations.

Divided into three comprehensive sections, this guide skillfully illustrates how EBM can help you find profitable answers to numerous performance-related questions, such as: What drives my stock price? How do I measure business unit performance? And How do I design incentives for my managers?

Section one sets the stage for the entire book by highlighting the major flaws in traditional measures of performance and providing hard, irrefutable empirical evidence that proves EBM is highly correlated with market-adjusted TRS.

Through section two, Copeland and Dolgoff reveal the specific implications of EBM for:

• Managing and evaluating the performance of existing businesses
• Making wise capital expenditure decisions
• Creating value via capital efficiency
• Communicating with investors
• Understanding the market's expectations for your company by reverse engineering your stock price
• Designing incentives that motivate value-focused decisions

In the final section, you'll see EBM from entirely different perspectives the investor's point of view as well as the public policy implications of this system. Section three also provides you with a frank comparison of the most popular value-based management systems with EBM.

To stay competitive in today's business world, you can't just meet expectations, you have to beat them. Outperform with Expectations-Based Management will show you how to do just this and much more.

Edition details

• Publisher: Wiley
• Publication date: 2005
• Language: English
• ISBN 10: 0471738751
• ISBN 13: 9780471738756
• Binding: Hardcover
• Edition number: 1
• Number of pages: 384