A critical analysis of ASOS plc’s shareholder wealth creation in the five-year period from 2014 to 2019

Abstract

To meet the goals of shareholder value and wealth creation, firms need to operate in a manner that supports achieving potential value for their shareholders (Largani et al., 2012). This paper critically analyses ASOS plc’s shareholder wealth creation for the five-year period from 2014 to 2019 and discusses the driving factors behind the results found. Firms that operate better than their peers have been found to be superior at creating shareholder value (Singh and Pattanayak, 2014). Management plays a crucial role in running a business efficiently, and their decisions and actions are expected to align with shareholders’ interests. Yet, conflicts can arise between management’s and shareholders’ interests, and this risk can be averse depending on the adequacy of the management (Franke, 1975). However, strong management alone is not enough to control the firm; it should be supported by corporate governance policies and strategic objectives that are aligned with the interests of stakeholders both inside and outside the company (Bhagata and Boltonb, 2008). For example, corporate social responsibility (CSR) is a set of practices that holds the firm responsible and accountable economically, environmentally and socially towards all stakeholder obligations (Lindgreen et al., 2009). Businesses should work to enhance shareholders’ wealth creation by adopting various strategies. This paper describes the link between financial theories and shareholders’ value maximisation and discusses the literature in this area. The paper begins with an introduction of the project’s aim and design, which is followed by a literature review, an overview of ASOS and its industry, financial and non-financial evaluations, a discussion and finally the conclusion and summary.