Value Based Management with Corporate Social Responsibility

by John D. Martin, J. William Petty II, James S. Wallace

As the first decade of the 21st century winds down we have seen a sea change in society's attitudes toward finance. The 1990s can best be described as the decade of shareholder supremacy, with each firm trying to outdo the other in their allegiance to shareholder value creation, or as it came to be known, Value-Based Management (VBM). No one seemed to question this culture as the rising firm valuations translated into vast wealth creation for so many.

Three significant economic events have reshaped how the public feels about an unbridled devotion to VBM and have defined the last the dot.com bubble in 2000, the infamous accounting scandals of 2001, and the collapse of the credit markets in 2007-2008. In all three of these events the CEOs were portrayed as reckless and greedy and Wall Street went from an object of admiration to an object of scorn.

The first edition of this book, Value Based The Corporate Response to the Shareholder Revolution was written to help explain the underpinnings of Value-Based Management. At the time of its publication, few questioned whether the concept was the proper thing to do. Instead, the debate was focused on how to implement a VBM program. With this new second edition, the authors look at VBM after having seen it through good times and bad. It is not their intent to play the blame game or point fingers. Nor is it their intent to provide an impassioned defense of VBM. Instead they provide an academic appraisal of VBM, where is has been, where it is now, and where they see it going.

208 pages, Hardcover

First published January 15, 2000

About the author

John D. Martin holds the Carr P. Collins Chair in Finance in the Hankamer School of Business at Baylor University, where he teaches in the Baylor EMBA programs and has three times been selected as the outstanding teacher. John joined the Baylor faculty in 1998 after spending 17 years on the faculty of the University of Texas at Austin. Over his career he has published over 50 articles in the leading finance journals, including papers in the Journal of Finance, Journal of Financial Economics, Journal of Financial and Quantitative Analysis, Journal of Monetary Economics, and Management Science. His recent research has spanned issues related to the economics of unconventional energy sources (both wind and shale gas), the hidden cost of venture capital, and managed versus unmanaged changes in capital structures. He is also co-author of several books, including Financial Management: Principles and Practice (11th ed., Prentice Hall), Foundations of Finance (8th ed., Prentice Hall), Theory of Finance (Dryden Press), Financial Analysis (3rd ed., McGraw Hill), Valuation: The Art & Science of Corporate Investment Decisions (2nd ed., Prentice Hall), and Value Based Management with Social Responsibility (2nd ed., Oxford University Press).