A Strategy-oriented Framework for Maximising Shareholder Value Creation in Listed Firms. A Perspective from Zimbabwe
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Abstract
The purpose: Main purpose of this study was to assess the impact of a number of strategic elements, such as strategy objectives, control objectives and strategy implementation, on shareholder value (SHV) creation in listed firms and then develop a framework for maximising SHV creation in developing economies from a Zimbabwe perspective, based on companies listed on the Zimbabwe Stock Exchange.
Design/methodology/approach: The research work was based on the total population of companies listed on the Zimbabwe Stock Exchange. These firms made up a sample of 59 firms during the period 2016-2018. The dependent or response variable used in this study was the shareholder value (SHV) and this was represented by share market price changes. A total of nine strategy variables were utilised as independent variables. These were strategy objectives, communication of strategy objectives, stable strategy formulation, belief in strategy implementation, commitment to strategy implementation, support for strategy implementation, control measures aligned to planning, agreed control measures and control feedback. The study employed a quantitative methodology using data from the Zimbabwe Stock Exchange and the African Financial Statements website. This data was processed using Panel data analysis, ANOVA and regression analysis to test the impact of the strategy elements on SHV creation.
Findings: From the regression analysis, the study found that five out of nine strategy elements had statistically significant positive impact on SHV creation in quoted companies in developing countries from a Zimbabwean perspective. These were commitment to strategy implementation, agreed control measures, control feedback, strategy objectives and control measures aligned to planning. This showed that strategy elements had some influence on the creation of SHV. The other four strategy variables had no impact on SHV creation. In addition, the test on the research model established that this model influenced a little over 11% of the changes in SHV in listed firms in Zimbabwe. It follows therefore that about 89% of SHV creation in markets such as Zimbabwe is influenced by other factors.
Research Implications/limitations: This study concluded that strategy elements can be used to enhance maximising SHV creation in developing economies such as in Zimbabwe and other African and Asian countries. Corporate managers and investors in listed firms
may maximise SHV creation by paying attention to strategy elements such as commitment to strategy implementation, agreed control measures, control feedback, strategy objectives and control measures aligned to planning, in their SHV creation campaigns. However, other more robust factors for enhancing SHV creation should be identified in order not to rely on strategy factors for generating better SHV. The strategy elements will not yield superior results as these provide only about 11% of the impact on SHV creation.
Originality/value: This study is the second of its type on the subject of SHV creation and the factors that impact on it in Zimbabwean. The study encourages and paves way for more research in the field of SHV creation in developing economies such as Zimbabwe and other countries. Corporate managers will be assisted by this framework to appreciate the SHV creation concept. They will be able to direct their attention and efforts on this key corporate objective to create value for their shareholders and also be able to apply a more investor oriented methodology for SHV creation
Keywords
shareholder value, shareholder value creation, strategy, formulation, implementation, control
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