Shareholder value is a concept that links the wealth of stockholders with the performance and value of the corporation. When a corporation succeeds in increasing the value of the firm, the value of the stock held by the shareholders increases as a result. Shareholder value is also known as "stockholder value" or "shareholder wealth."

It is important to note that shareholder value is not synonymous with corporate profits. There are various financial measurements that are used to determine the value of the company and, in turn, the shareholder value. As a whole, these measurements provide an indication of the company’s financial and investment performance in relation to its peers.

The total shareholder return (TSR) is seen as the definitive measure of shareholder value. The TSR focuses on both the income generated (dividends and stock buybacks) as well as the capital appreciation of the company’s stock. Each of these components plays a key role in the shareholder value equation and in the performance of the company.

Additionally, as a corresponding value to shareholder value, is the concept of “shareholder priority.” Through a combination of legal, economic, and corporate finance techniques, these two axes—shareholder value and shareholder priority—act as the lens through which a company is managed and its performance is assessed. The goal of shareholder value is to maximize the wealth of shareholders by creating an environment that is favorable to shareholders’ interests and investments.

In summary, shareholder value is a concept that links the wealth of stockholders with the performance and value of the corporation. Corporate performance is determined by various financial measurements, with total shareholder return functioning as the definitive measure of shareholder value. Companies create shareholder value by increasing the income generated (dividends and stock buybacks) and the capital appreciation of the company’s stock. In turn, shareholder priority is the combination of legal, economic, and corporate finance techniques that allow companies to maximize shareholder wealth by creating an environment that is favorable to shareholders’ interests.