What is total shareholder return?

Total shareholder return is a financial performance measure that reflects the total gain or loss experienced by shareholders over a specific period, encompassing both capital gains and dividends. This measure provides a comprehensive view of the returns generated for shareholders, as it includes the appreciation in the stock price (capital gains) and any cash payments made to shareholders (dividends).

This is crucial for investors because it illustrates the overall performance of their investment in a company, combining both the appreciation in the value of their shares and the income received from dividend payments.

Other options do not encompass all aspects relevant to total shareholder return. For example, the measure of a company's total revenue over expenses focuses primarily on profitability, while the calculation of an average stock price over a period does not account for total investment returns. Similarly, assessing the efficiency of corporate management involves different metrics, often concentrating on operational effectiveness and not on shareholder gains directly. Thus, option A captures the essence of total shareholder return effectively.