Role of the shareholder

In the operation of the Capitalist economy , the role of the shareholder is to make it possible a Entreprise to finance its entrepreneurial project. The contribution of funds of the shareholder and his taking risk could then be supplemented by financings of other institutional investors (banks, saving,…).

Mechanism of creation of value

Créer value is the finality of the company. This expression of " creation of valeur" is seldom well included/understood whereas the idea which it is carrying is however simple.

The Création of value is the fact of selling a product or a service more expensive than its Cost price. It is necessary to allow the remuneration of the funds brought and the risk taken by the shareholder.

The Création of value occurs at the time of the marketing of a good or of a rare service and quality that many Consommateurs wants to buy because it corresponds to their needs or their desires (ex: PlayStation of Sony, reader Ipod and telephones EPhone of Apple, vehicle Renault Espace which took 50% of the market in France,…).

Because of important request (quality) and weak offer (scarcity), the commercial price of the good becomes high in order to control and to put in adequacy supply with. The high price of the good then makes it possible the productive enterprise to increase in an important way its sales turnover and to thus create value. The amount of creation of value corresponds then to the difference between the high selling price (of with the passion of the customers) and the less cost price (of at the costs of the raw materials and labor).

Role of the shareholder in the creative process of value

Two questions arise then:

which is the person in charge of the creation of the value?
how to put in situation creation of value by the marketing of a new rare product and of quality?

Some affirm that they are exclusively the employees who create the value since they manufacture and ensure the production of the rare good and of quality awaited by the market… This traditional critical analysis of capitalism leads even some (see Extreme-left) to deny the need for a Direction within the company (see Auto-gestion) and to want the removal of the shareholder (see Collectivisme).

In fact, it is generally allowed that the creation of value results from the action of 3 major actors:

the employee who produces quickly and many products of quality awaited by the market,
the direction which makes the strategic good decisions to decide which new relevant products to conceive and manufacture,
the shareholder which brings capital to finance the R & D and the Investissement S industrialists necessary to the marketing of the new products of quality, creators of value.

Shareholder and financial risk

Unfortunately, to succeed on a market (ex: commercial success of Airbus, the software CATIA,…) by there creating value is not an activity gaining with all the blows. To imagine a new rare product and of quality, to design it, produce it, distribute it before the Concurrence include/understand many risks of failures (ex: commercial failure of the Renault Avantime, the Citroen XM, the Volkswagen Phaeton, the Harmony,…) and it is necessary to have an actor within the company loan to assume these risks. It is the role of the shareholder . He provides the capital which makes it possible to carry out the advance of the expenses of R & D, of production, distribution… By hoping that Management makes the strategic good decisions of investment, the shareholder awaits that the funded capital reports to him more than if he slept without risk on little remunerated placements (ex: Livret has Savings bank, good of the Treasury,…).

Without catch of financial risk, not of possibility of creation of value. Indeed, to produce more money, cash needs to become solid (in " incarnant" in material investments (ex: machines, software, factories,…) and of the products and services with high added value) before becoming again liquid during the production of a Return on investment.

Financial dynamics and remuneration of the risk

This turnover of capital concerns true a financial Dynamique of which it is necessary well to include/understand of it the operation Systémique which - within the framework of the models suggested by the Automatique - concerns a positive loop of Rétroaction (known as also buckles amplification or Virtuous circle).

A contrario, the commercial failure of a new product on a destroyed market of the value and concerns a negative loop of Rétroaction or Vicious circle.

The Dividende S poured with the shareholder correspond then to the remuneration of its taking risk and to the valorization of the confidence which the shareholder decides to freely grant by engaging his funds in the selected company.

According to a Commonplace, the shareholder would await an annual output of the capital engaged about 15%/an, i.e. for the purchase of an action of 100 euros, he would hope that the total of the annual dividend and the annual rise of the course is of 15%. In the facts, the awaited outputs are very variable, the market being subjected to periods of passion or pessismism. On average, these outputs are function:

of the Interest rate without risk (that of the government bonds),
of the Allowance for risk (which measures the aversion or the tolerance with the risk for the whole of the financial market, or a given wallet) and
of the Coefficient beta (for an in an individual capacity).

Of course, the Stock exchange courts are function, with the psychological distortions close, of these waitings: more the output required is high (periods of pessimism and aversion to the risk) more the course is low (since the course is mathematically the denominator of the ratio of output and owing to the fact that the reserve of the shareholders to buy actions reduces the request for titles).

Random links: