What is happening here is that earnings have expanded in meaning to include the perceived profits that will accrue in the future, and the linkage of shareholders value with earnings is actually even stronger. Shareholder value is a long term concept Shareholder value is not about the day to day gyrations of the stock markets. It is, by definition, a long term concept which takes into account the secular rises in share prices and returns to shareholders. It is driven by the strategic success of the company as also its operational performance. In other words, it is the traditional drivers of value that drive shareholder value.
Shareholder value is all that matters Shareholders exercise the ultimate control over their company.
They are also the residual claimants to its assets which means their claims come last after all other stakeholders have been paid off. Not only do they bear the risk in respect of their capital, they through their control of the management ultimately drive all strategic decisions. If shareholder value for a company operating in a free market economy is not maximised, shareholders will use this control to effect such changes in the management that the value to them is maximised. They are the only true stakeholders in a company, the rest are just commercial parties seeking to maximise the benefit from the current set of transactions that they undertake with the company. In an extreme situation where the management squanders its opportunities and does not maximise shareholders wealth, someone else who can do the job better will step in and offer to run the company for them i.e. a takeover.