What is it? Shareholders invest capital, which company directors manage, generating profits. Some profits are reinvested, and some returned to shareholders as dividends. As the company flourishes, its share price rises, which means more capital growth for shareholders. That's the theory.
In practice, 'shareholder value' has become a euphemism for getting the share price up fast. This wards off predators and makes executive share options attractive. But the share price is a fickle beast, a dubious guide and an unforgiving master. Getting it up and keeping it up are two very different things.
Where did it come from? Harvard Business Review has a lot to answer for. In 1981 it published a piece by Dr Alfred Rappaport of Northwestern University entitled 'Selecting strategies that create shareholder value'.
It updated ideas he'd outlined 10 years earlier in Information for Decision Making. But once HBR has popularised an idea, you can't stop people talking about it. From the 1980s onwards, shareholder value became the dominant mantra of business leaders. It is no coincidence that the supremacy of Rappaport's ideas coincides closely with the tenure of Jack Welch at GE.
Welch was the prime shareholder value leader - slashing, burning, downsizing and sweating assets until the stock market pushed the share price higher.
Where's it going? In early 2000, before the dot.com bubble burst, US author Allan Kennedy published The End of Shareholder Value. Four years later, though, there's little sign that corporate leaders or institutional investors have lost their appetite for the concept. You may resent the City's short-termism and feel it foolish to select one unpredictable number as a measure of your success. But in the absence of an equally powerful rival theory of business, it looks as though we are condemned to go on creating shareholder value till we die.
Fad quotient (out of 10) Seven - it just won't lie down.