IESE Research Papers,
IESE Business School

Abstract: 2002 was a bad year for the shareholders of the companies in the Euro Stoxx 50: the shareholder value destruction of the companies in the Euro Stoxx 50 was 958,968 million euros. In 2002 only Eni created value (3,374 million euros). The remaining 49 companies destroyed value and had negative returns. Alcatel had the lowest shareholder return in 2002 (-77.9%). Shareholder value destruction in the 3-year period 2000-2002 was 1.9 trillion euros. The market value of the 50 companies was 1.42 trillion euros in 2002, and 2.24 trillion euros in 2001, and 2.75 trillion euros in 2001. The author also calculates the created shareholder value of the 50 companies during the six-year period 1997-2002. Nokia was the top shareholder value creator and Allianz the top shareholder value destroyer during the six-year period. A very weak relationship is found between return and size. A portfolio long in the companies that entered the index and short in the companies that abandoned the index had on average a 10% return in the 16 days prior to the index recomposition and a -6% return in the 12 days after the index recomposition. In 2002, the Euro Stoxx 50 was much more volatile than the S&P 500 or the Dow Jones.

Keywords: shareholder value creators; shareholder value destroyers

JEL-codes: G12; G31; M21

23 pages, August 9, 2003

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