This paper provides an empirical comparison between two versions of a new accounting ratio devised by Davis (1990a, 1990b) and Kay (1993) and the traditional capital employed (ROCE) ratio. The new measures, 'added value on inputs employed' (AVIE) and 'added value on net output' (AVNO), are both based on a version of residual income they label 'added value', but differ in choice of scaling variable. Empirical evidence is provided in this paper on AVlE and AVNO, including cross-sectional patterns, distributional properties, sensitivity to alternative specifications, and rank-ordering and serial-correlation performance compared with ROCE. AVIE and AVNO differ markedly from ROCE in terms of absolute levels and account for at most half of the latter's cross-sectional variation. On the other hand, the results indicate that both the rank orderings and rank predictions of the different measures are very similar. The distributional properties of the added value ratios are sensitive to choice of scaling variable, suggesting that considerable care has to be exercised in drawing conclusions from the absolute rankings of these measures. The new added value ratios provide signals about firm rankings that differ only to a limited degree from those rendered by the traditional ROCE ratio.

The primary goal of the ILO is to work with member States towards achieving full and productive employment and decent work for all. This goal is elaborated in the ILO Declaration 2008 on Social Justice for a Fair Globalization, 1 which has been widely adopted by the international community. Comprehensive and integrated perspectives to achieve this goal are embedded in the Employment Policy Convention of 1964 (No. 122), the Global Employment Agenda (2003) andin response to the 2008 global economic crisisthe Global Jobs Pact (2009) and the conclusions of the Recurrent Discussion Reports on Employment (2010 and 2014). The Employment Policy Department (EMPLOYMENT) is engaged in global advocacy and in supporting member States in placing more and better jobs at the center of economic and social policies and growth and development strategies. Policy research and knowledge generation and dissemination are essential components of the Employment D '. T k reviews, policy and research briefs, and working papers. 2 The Employment Policy Working Paper series is designed to disseminate the main findings of research on a broad range of topics undertaken by the branches of the Department. The working papers are intended to encourage the exchange of ideas and to stimulate debate. The views expressed within them are the responsibility of the authors and do not necessarily represent those of the ILO.