what is shareholder value 
shareholder value is the value delivered to the equity owners of a corporation thanks to management s ability to increase sales earnings and free cash flow which leads to an increase in dividends and capital gains for shareholders a company s shareholder value depends on strategic decisions that its board of directors and senior management make including the ability to make wise investments and generate a healthy return on invested capital if this value is created particularly over the long term then the share price increases and the company can pay larger cash dividends to shareholders mergers in particular tend to cause a large increase in shareholder value shareholder value can become a hot button issue for corporations as the creation of wealth for shareholders does not always or equally translate to value for the corporation s employees or customers understanding shareholder valueincreasing shareholder value also increases the total amount in the stockholders equity section of the balance sheet the balance sheet formula is 