Corporate Financial Control Mechanisms and Firm Performance: The Case of Value‐Based Management Systems

Ryan, Harley E.; Trahan, Emery A.

doi:10.1111/j.1468-5957.2006.00660.x

Cited by 55 publications

(78 citation statements)

References 31 publications

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“…Ryan and Trahan, 2007). 1 Thus, with the increasing acceptance of the shareholder value principle, value-based management (VBM) systems have received much interest among managers, consultancy firms, and the financial press.…”

Section: Introductionmentioning

confidence: 99%

“…Thus, VBM metrics may constitute the basis for an economically meaningful integrated management strategy and financial control system (e.g. Ryan and Trahan, 2007). Now, while this might rationalize why VBM systems have gained increasing interest, evidence on whether firms that adopt VBM systems are rewarded by superior firm performance is scarce and inconclusive.…”

Section: Introductionmentioning

confidence: 99%

“…Prior literature generally analyzes the effect of VBM systems on operating performance using accounting figures (e.g. Ryan and Trahan, 2007). Operating performance measures, however, are problematic since managers have some discretion with respect to accounting figures, e.g.…”

Section: Introductionmentioning

confidence: 99%

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Considering the shareholder perspective: value-based management systems and stock market performance

et al. 2010

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Michael (2010) : Considering the shareholder perspective: value-based management systems and stock market performance, CEFS working paper series, No. 2010-09 AbstractWe empirically study the use of value-based management systems in listed German firms and examine implications for firms' stock market performance. Using a novel, hand-collected data set covering 1,083 firm years from 2002 to 2008, we find that value-based management systems become increasingly common. Specifically, in 2008 42% of our sample firms have implemented such a system. In the empirical analysis, we find that firms that implement value-based management systems earn statistically significant and economically substantial abnormal stock market returns measured within a two-year adoption phase. These excess returns are not jeopardized by poor post-adoption returns. In the analysis, we carefully control for risk and account for endogeneity concerns. Overall, our findings support the view that shareholders consider the adoption of a value-based management system as a credible signal that management will focus on shareholder interests and that such systems actually increase shareholder value. * We are grateful for valuable comments of several anonymous referees,

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Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Considering the shareholder perspective: value-based management systems and stock market performance

et al. 2010

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“…vertės valdymo metodų taikymas integruoja valdymo strategiją ir finansinės kontrolės mechanizmus skatinant padidinti akcininkų vertę bei sumažinti interesų konfliktus tarp jų (Ryan, Trahan 2007 Kuriuo metodu remtis labiau, kuriuo mažiau -ir šią dieną išlieka atviras klausimas. Myers (1996) pažymi, kad vBM metodų sistemiškas taikymas ir agitavimas priklauso nuo jų naudojimo konsultacinėse įmonėse ir jų populiarinimo tarp savo klientų.…”

Section: Vertės Valdymo Metodai (Vbm)unclassified

“…Šis metodas išreiškiamas kaip įmonės pinigų srautų vidinė pajamų norma ir lyginama su projekto ar įmonės kapitalo kaina, kad būtų galima apskaičiuoti aktyvų kuriamą ar naikinamą vertę (Ryan, Trahan 2007;Myers 1996). Analizuodami šį metodą matome, kad skaičiavimai yra ekvivalentiški IRR (projekto vidinė pajamų norma) metodo skaičiavimui, tačiau tarp CFROI ir IRR metodų skaičiavimo galima įvardinti šiuos skirtumus:…”

Section: Pinigų Srautų Grąža Investicijoms (Cfroi)unclassified

Measuring Project Performance with Value-Based Methods

Tvaronavičius

2008

Business: Theory and Practice

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Santrauka. Straipsnyje, be dažniausiai taikomos finansinės analizės, analizuojamos vertės valdymo metodų taikymo projektams galimybės pagal įmonės vertės koncepciją. Pateikiama vBM metodų klasifikacija remiantis pinigų srautais, turto balansine ir rinkos verte, rodiklių ir metodų taikymo ypatumai atliekant vertinimą priklausomai nuo konkrečių investuotojų tikslų. Darbe apžvelgiami esminiai projekto veiklos efektyvumo metodų taikymo būdai valdant įmonės vertę ir suformuluotos su jų trūkumais ir privalumais susijusios išvados.Reikšminiai žodžiai: projektas, vertės valdymo metodai, ekonominis pelnas (EP), ekonominė pridėtinė vertė (EvA), rinkos pridėtinė vertė (MvA), pinigų srautų grąža investicijoms (cFROI), pinigų srautų pridėtinė vertė (cvA), akcininkų pridėtinė vertė (SvA), likutinis pelnas (RI). MEASURING PROJECT PERFORMANCE WITH VALUE-BASED METHODS Tomas PetravičiusVilnius Gediminas Technical University, Saulėtekio al. 11, LT-10223 Vilnius, Lithuania E-mail: finansu.katedra@vv.vgtu.lt Received 21 September 2007; accepted 1 March 2008 Abstract. The value of the company is the benefit of positive net present value projects which give better return than the cost of invested capital. It is important for investors and shareholders to choose the optimal collection of strategic decisions and evaluate the performance of project realization, to measure yearly actions of managers to create shareholder value. value-based methods are used to measure the performance of projects with the objective to create the value of company. After grouping of valuation methods depending on cash flow, balance and market value, their useful adjustment to controlling performance for specific needs of investors in performed. In the paper the approach to project yearly performance management is discussed to control the value of enterprise, with benefits and limitations formulated in conclusions.Keywords: project, value-based management, Economic profit (EP), economic value added (EvA), marked value added (MvA), cash flow return on investment (cFROI), cash value added (cvA), shareholder value added (SvA), residual income (RI).

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Background: Cost-of-Capital in the Finance Literature

Schlegel¹

2015

Contributions to Management Science

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The literature review in this thesis is distributed over two chapters. The aim of Chap. 2 is to discuss literature from the field of cost-of-capital. This is necessary as a foundation for the subsequent chapter, which is more application-oriented. In Chap. 3, previous empirical results on companies' cost-of-capital practices are discussed. Research gaps will be identified at the end of that chapter.This chapter is structured as follows: In Sect. 2.1, the broader field of company cost-of-capital is discussed. This includes a brief discussion of traditional seminal papers as a foundation for the rest of the literature review as well as a review of contemporary discussions about general issues of cost-of-capital, such as alternative determination models and the consideration of unsystematic risk. Section 2.2 shows how the field of cost-of-capital relates to the different sub-disciplines of Finance and for which fields of application of Managerial Finance it is relevant. In particular, the role of cost-of-capital in internal capital allocation, performance measurement and value-based management is discussed. In Sect. 2.3, a theoretical framework for the determination of cost-of-capital in a company group context that is derived from traditional Finance theory is presented as a foundation for the subsequent section. In Sect. 2.4, previous research on the determination techniques for the cost-of-capital of business units and projects is discussed thoroughly. This includes a detailed discussion of the techniques as well as the theoretical and empirical methods adopted by other researchers.

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Corporate Financial Control Mechanisms and Firm Performance: The Case of Value‐Based Management Systems

Cited by 55 publications

References 31 publications

Considering the shareholder perspective: value-based management systems and stock market performance

Considering the shareholder perspective: value-based management systems and stock market performance

Measuring Project Performance with Value-Based Methods

Background: Cost-of-Capital in the Finance Literature

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