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The leadership premium: How companies win the confidence of investors
Taking stock of leadership
Market perceptions of leaders move share prices and The Leadership Premium reveals just how much. The report puts a hard metric on the “intangible asset” of leadership, revealing that, in some sectors, good leaders can account for more than one-fifth of equity value. The report also details the core capabilities analysts look for and how they “test” the quality of leadership.
More than 50 percent of stock market analysts routinely factor leadership into their valuations—and 80 percent award a premium for particularly effective senior teams, according to a new Deloitte research paper.
Based on a global study of investment bankers, private equity companies, and financial analysts, the paper, The Leadership Premium: How companies win the confidence of investors, puts a hard metric on the “intangible asset” of leadership, revealing that, in some sectors, good leaders can account for more than one-fifth of equity value.
In interview after interview, analysts told Deloitte that the quality of senior leadership helped decide the long-term potential of a stock. The gap between the value of an effectively-led and ineffectively-led company could, says the paper, be as much as 35.5 percent.
So how do analysts judge leaders—and how can companies bridge that gap?