Alfred Rappaport

Economist, consultant, and Wall Street Journal contributor Alfred Rappaport provides managers and investors with the practical tools and tests for a corporate strategy that creates shareholder value.The ultimate test of corporate strategy, the only reliable measure, is whether it creates economic value for shareholders.After a decade of downsizings frequently blamed on shareholder value decision making, this book presents a new and indepth assessment of the rationale for shareholder value. Further, Rappaport presents provocative new insights on shareholder value applications (1) business planning, (2) performance evaluation, (3) executive compensation, (4) mergers and acquisitions, (5) interpreting stock market signals, and (6) organizational implementation. Readers will be particularly interested in Rappaport's answers to three management performance evaluation (1) What is the most appropriate measure of performance? (2) What is the most appropriate target level of performance? and (3) How should rewards be linked to performance? The recent acquisition of Duracell International by Gillette is analyzed in detail, enabling the reader to understand the critical information needed when assessing the risks and rewards of a merger from both sides of the negotiating table.The shareholder value approach presented here has been widely embraced by publicly traded as well as privately held companies worldwide. Brilliant and incisive, this is the one book that should be required reading for managers and investors who want to stay on the cutting edge of success in a highly competitive global economy.

“As Rappaport keeps on speaking out for the realities surrounding investment and speculation, our society will profit as it builds on his keen insights.”―from the Foreword by John C. Bogle, founder of the Vanguard Group “Al Rappaport brings insight and wisdom to the short-termism debate, fully demonstrating the way perverse incentives are undermining public companies and capital markets.”―John Plender, Financial Times "In this rigorous, useful, and delightful book, Rappaport undresses short-term financial incentives for what they parasites that draw the value-creating innovation out of companies. And he shows how executives can align long-term value-creating investments with the right investors' expectations."―Clayton Christensen, Harvard Business School “How to make managers focus on the long-run is one of the most consequential and difficult questions in corporate governance and is the subject of much debate and disagreement. Professor Alfred Rappaport’s insightful book is a valuable contribution to this important debate.”―Lucian Bebchuk, Professor, Harvard Law School, and coauthor of Pay Without Performance “ Saving Capitalism from Short-Termism insightfully exposes the contradictions by which we incentivize money managers to require short-term focus by company managers. Again and again in rereading this book, I am struck with the author’s felicitous style in raising subject after subject in which I have long been interested―but, until this read, have not been able to resolve. Buy it, read it, and enjoy.”―Robert A.G. Monks, founder ISS (Institutional Shareholder Services), Lens Governance Advisors, and The Corporate Library “Capitalism fails when corporate managers and professional investors prefer their own interests to those the true owners of businesses. In Saving Capitalism from Short-Termism , Al Rappaport shows how new incentives schemes can deliver shareholder value for the 21st century.”―Edward Chancellor, author of Devil Take the A History of Financial Speculation and member of GMO's Asset Allocation team About the Book Business leaders today obsess over quarterly earnings and the current stock price―and for good reason. Corporate incentives typically focus on short-term profits rather than long-term value creation. Nothing is more harmful to businesses―and to the broader economy. Few business thinkers in recent decades have contributed more to this subject than Alfred Rappaport. As an author and educator, Rappaport is a pioneer in developing the principles of values-based management and is an acknowledged authority on how to make long-term shareholder value the essential driver of corporate strategy. His latest work, Saving Capitalism from Short-Termism , is a clarion call for conquering the addiction to short-term profit―and getting on the path to building long-term value. Rappaport’s solution to short-termism is simple but business leaders must align the interests of corporate and investment managers with those of their shareholders and beneficiaries. His plan

Expectations Investing offers a unique and powerful alternative for identifying value-price gaps. Rappaport and Mauboussin provide everything the reader needs to utilize the discounted cash flow model successfully. And they add an important they suggest that rather than forecasting cash flows, investors should begin by estimating the expectations embedded in a company's stock price. An investor who has a fix on the market's expectations can then assess the likelihood of expectations revisions. To help investors anticipate such revisions, Rappaport and Mauboussin introduce an "expectations infrastructure" framework for tracing the process of value creation from the basic economic forces that shape a company's performance to the resulting impact on sales, costs, and investment. Investors who use Expectations Investing will have a fundamentally new way to evaluate all stocks, setting them on the path to success. Managers will be able to use the book to devise, adjust, and communicate their company's strategy in light of shareholder expectations.

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