IESE Research Papers,
IESE Business School

Abstract: 2002 was a bad year: the shareholder value destruction of the companies in the S&P 500 was $3.3 trillion. In 2002 only 16% of the companies created value (80 companies created value and 420 companies destroyed value). The percentage of value creators was 35%, 54%, 47% and 53% for 2001, 2000, 1999 and 1998, respectively. The market value of the 500 companies was $8.1 trillion in 2002 and $10.4 trillion in 2001. The top shareholder value creators in 2002 were Boston Scientific ($6.5 billion), Bank of America ($6.4 billion), Wachovia ($4.7 billion), and Procter ($3.3 billion). The top shareholder value destroyers in 2002 were General Electric (-$185 billion), Intel (-$125 billion), Microsoft (-$119 billion) and AOL Time Warner (-$101 billion). We define created shareholder value and provide the ranking of created shareholder value for the 500 companies. We also calculate the created shareholder value of the 500 companies during the five-year period 1998-2002. Wal-Mart Stores was the top shareholder value creator and Coca Cola the top shareholder value destroyer during the five-year period. We also provide the shareholder return of the 500 companies. Only 148 companies (out of the 500) had positive return in 2002, the highest being Providian Financial (82.8%). Dynegy had the lowest return (-95.3%).

Keywords: shareholders value creation; created shareholder value; equity market value; shareholder value added; shareholder return; required return to equity; EVA

JEL-codes: G12; G31; M21

22 pages, April 7, 2003

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