Is it TRUE? shareholder wealth?

Question

is there a relationship between shareholder value and firm profitability. i.e. the more profitable a company the higher its shareholder wealth?

Answer 1

I don't know.  Certainly those who had invested in Ford and GM are not so wealthy as they once were and neither are those who invested in Citigroup, GE, and AIG.   Of 547 companies that have a return on assets above 15%,  56 of those have a 10 year annual investor return of 20% annually.  That is a little over 10% of those companies but it is 14% of the 390 companies that have had 20% annual returns during the past 10 years.  On the other hand of the 7516 companies that have a ROA of less than 15%,  390 had an annual investor return of 20% annually or 5.2% so it would appear that you are about 3 times more likely to increase your shareholder wealth by investing in companies with high prifitablity.

If we were to use ROE as an indicator of the 1803 companies having an ROE of greater than 15%, 227 have provided an investor return of greater than 20% annually for the previous 10 years.  But look at this!  There were only 390 companies total that did provide a 20% annual return to investors during that period.  58% of those that did so have an ROE greater than 15%

Answer 2

of course why do you think people buy shares and get dividend

(the piece of paper looks pretty with big words and numbers and wants me too sign next to the arrow with sign here)

Answer 3

YES , THERE IS (RETURNS) lol