Role of inventory and assets in shareholder value creation

In this study is examined the role of inventories and assets in the financial and shareholder value creation of a company. Research builds several Data Envelopment Analysis (DEA) models (staged), and tests their connections with each other. Research concerns publicly traded manufacturing and trade companies of Finland and three Baltic States (Estonia, Latvia and Lithuania) during the years 2010–2018. Logical and in two stages proceeding DEA efficiency model gets statistical significance, and there is support that inventory and asset related measures will lead to revenue, profits and cash flow, which together will eventually result in higher shareholder value (like stated in operations and supply chain management theories such as theory of constraints). However, this finding has weakness as explanation power is low, and there is a lot of noise. It could also be so that inventories and assets are part of bunch of other inputs, which together directly create shareholder value. Therefore, it remains as an open question whether inventory and assets should be managed through classical and logical stages in companies through organization hierarchy, or if inventory and assets should be just a part of group of factors, which together aim to increase shareholder value. © 2020