MFS

Objective Function A mathematical or logical formula defining what an organization is trying to maximize.

Value Maximization The strategy of making decisions that increase the total market value of the firm over time.

Stakeholder Theory The theory that corporations should be managed in the interests of all groups affected by their actions.

Social Welfare The total well-being or prosperity of a society as a whole.

Trade-off A situation where one must give up some of one thing to gain more of another.

Externalities Costs or benefits that affect a third party who did not choose to incur them (e.g., pollution).

Agency Costs Costs arising when managers (agents) do not act in the best interest of the owners (principals).

Balanced Scorecard A management tool that measures performance across multiple dimensions (financial, customer, etc.).

Accountability Ansvarsutkrävande. Möjligheten att hålla någon ansvarig för sina handlingar och resultat.

Single-valued measure A single number or value used to evaluate success or performance.

Shareholder Value The financial value created for shareholders through stock price appreciation and dividends.

Intangible Assets Non-physical assets such as brands, patents, and customer loyalty.

Efficient Markets Hypothesis (EMH) The theory that stock prices fully reflect all available and relevant information.

Tobin’s q A ratio comparing (förhållande) the market value of a firm to the replacement cost of its assets.

Abnormal Return The difference between the actual return of a security and the expected return based on risk models.

Systematic Risk (Beta) The market-wide risk that cannot be eliminated through diversification, measured by Beta.

Idiosyncratic Risk Firm-specific risk that can be reduced or eliminated by holding a diversified portfolio.

Brand Equity The commercial value that derives from consumer perception of the brand name of a particular product.

Customer Equity The total discounted lifetime values of all of the firm’s customers.

Myopic Management When managers prioritize short-term financial goals over long-term value creation, like cutting R&D or marketing.

Persistence Modeling An analytical approach (often using VAR models) to capture the long-term, evolving effects of marketing actions.

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