The book links corporate strategy with valuation techniques. It incorporates strategic, financial and institutional approaches into a framework for determining how companies are governed, executives are paid and business strategies are implemented and evaluated. The matrix measures prospects of sustainable growth and profitability that lead to value creation. Value can be created for equity holders by increasing debt, to a point, according to Jarrell. Each dollar of new debt should increase the company's equity value by 20 cents to 40 cents until the company's financial risk becomes excessive.
Dividend policy produces a similar trade-off.
Corporate governance issues such as performance, compensation policies, investor communications and corporate overhead should be examined closely. All business activities should be measured to ensure that they are aligned with value-creating goals, she says. Communications with investors should be clear, concise, regular and reliable to build confidence about a company's strategic direction, and companies should be vigilant in guarding against corporate overhead. The impact of excess overhead on value can be staggering.