Drivers creating shareholder value in South African manufacturing firms

Abstract

The objective of this study was to analyse the value drivers of manufacturing firms listed on the Johannesburg Stock Exchange. Unique performance measurement tools and processes exist in the manufacturing industry. The creation and measurement of shareholder value however, should be the goal of any manager in a firm. In order to optimise shareholder value creation, it is necessary to identify value drivers that management can control. A multiple regression analysis was used to identify the significant micro-value drivers of South African manufacturing firms. It was found that the value drivers that are significant in the explanation of shareholder value are the cost of goods to sales percentage, the degree of manufacturing leverage and the capital investment in plant and equipment. Value-based management, incorporating these value drivers, can guide manufacturing managers towards optimal shareholder value creation.