The Shareholder Value Drivers in Digital Age – An Empiric Perspective of Intangible Value, R&D’s and Network Sales

Abstract

Increasing digitization is shifting the focus of value generation to the tertiary sector. The classic economic production factors seem to be fading into the background. The question arises as to whether value-oriented management concepts still have their justification in the digital age. This paper takes up Alfred Rappaport's shareholder value and examines for the period 1997 to 2020 whether the known value drivers still have a significant influence on shareholder value. In addition, new value drivers corresponding to the digital age, such as investments in intangible assets and R&D investments, as well as the affiliation to the group of digital companies are examined for their significance. Using multivariate regression, the relationships between shareholder value as the dependent variable and the independent variables are presented. On the one hand, the classic value drivers according to Rappaport are analyzed. On the other hand, selected digital value drivers such as intangible assets, R&D expenses and network sales are analyzed. This paper examines which of Rappaport's betting drivers still explain shareholder value and tests whether new betting drivers can be identified. For companies in the S&P 500, it was possible to demonstrate that the value drivers according to Rappaport continue to have a significant influence on shareholder value. At the same time, it was also possible to attest significance to the new digital value drivers. However, the explanatory power of the new model is significantly lower than that of the classic value drivers of shareholder value.