Which companies did what and how much for investors

Pablo Fernandez, Javier Aguirreamalloa and Luis Corres Avendaño have just published a paper titled “Shareholder Value Creators in the S&P 500: 1991-2010”.

The S&P500 is an index of 500 of the largest US publicly-traded companies (i.e. their shares can be bought and sold by anyone).

The paper provides their definition of "shareholder value", and shows that, in the period 1991-2010, the S&P 500 destroyed value for shareholders to the tune of $4.5 trillion. In other words, on average, if you had invested in an index of these companies, you would have lost at least some of the real value of your money.

You might be encouraged by the fact that, between 1991 and1999, the S&P500 did create value ($5.1 trillion), but it went on, between 2000-2010, to destroy value again, to the tune of $9.6 trillion.

All that of course is for the S&P500 as a whole.

In examining the record of individual companies in that index, they calculate that, in the 18 years between 1993 and 2010, the best shareholder value creators were Apple ($212bn), Exxon ($86bn), IBM (78bn), Altria (70) and Chevron (67).

By contrast, the companies tha destroyed shareholder value most in that period were American International Group ($-217), Pfizer (-188), General Electric (-183), Bank of America (-170), Citigroup (-169) and Time Warner (-130).

Forty one per cent of the companies which were included in the S&P 500 in 2004 or in 2010 created value in 1993-2010 for their shareholders, while 59% destroyed value. Sphere: Related Content