Measuring shareholder value in asset‐based lending industries

Abstract

Purpose

The purpose of this paper is to analyse the creation of shareholder value (SHV) created by non‐depository financial institutions and, especially, by leasing and factoring (L&F) companies.

Design/methodology/approach

The cost of capital of both L&F companies is estimated using an accounting procedure and, next, the economic value added (EVA) created by Italian L&F companies over the period 2002‐2004 is estimated.

Findings

L&F companies display high profitability and EVA levels over the period analysed: a very large part of leasing and factoring companies achieved a positive EVA and the lowest median level of EVA created is at least 11 per cent of capital invested in the company, while at least 50 per cent of leasing companies achieved a positive EVA and the lowest median level of EVA created is almost 2 per cent of capital invested in the company.

Research limitations/implications

Future research may try to investigate other markets. The paper's focus on Italy for data collection for L&F is problematic and data are collected from a unique data base.

Practical implications

SHV creation is the main strategic objective of L&F companies so the paper is of interest to both academics and practitioners.

Originality/value

This is the first study focusing on SHV creation by non‐depository financial institutions and, especially, L&F companies.

Citation

Fiordelisi, F. and Monferrà, S. (2009), "Measuring shareholder value in asset‐based lending industries", Managerial Finance, Vol. 35 No. 10, pp. 885-903. https://doi.org/10.1108/03074350910984746