A Review of Alfred Rappaport's Creating Shareholder Value.

This is an analysis and review of the book by Alfred Rappaport titled "Creating Shareholder Value." The importance of the "Creating Shareholder Value" concept is that it reasserts the importance of the shareholder and the importance of Rappaport's book is that it argues that this concept "must emerge as the new standard for business performance." The objectives of this review are to describe and evaluate Rappaport's positions, and to offer some ideas on the subject of creating shareholder value. Creating shareholder value is a widely used term but a concept that is not well understood and about which there is disagreement. Aside from the relatively few not-for-profit corporations, corporations are formed by people who own the common stock with one primary purpose in mind, to make money for the stockholders. There is little or no confusion about the initial objective of a start-up corporation. However, as the corporation becomes large and the original owner-managers sell out, professional executives manage the firm and professional and amateur money managers become the stockholders.