Value based financial performance measures: An evaluation of relative and incremental information content
Year: 2008
Type: article
Abstract: Value-based (VB) financial performance measures are often advanced as improvements over traditional measures. It is argued that the inclusion of a firm‟s cost of capital in the calculation of these measures facilitates the evaluation of value creation. Furthermore they attempt to remove some accounting distortions resulting from the limitations of conventional accounting information. This paper investigates the ability of four VB measures to explain market-adjusted share returns and compare it to that of some traditional measures. Empirical results indicate that the relative information contents of the VB measures are not greater than that of earnings. The incremental information content tests indicate that their components add significantly to the information content of earnings, but that the level of significance is relatively low
Source: Corporate Ownership and Control
DOI: 10.22495/cocv6i1p7
Author: Pierre D. Erasmus
Language: English
Subfield: Strategy and Management
Domain: Social Sciences
Open Access status: hybrid
OpenAlex ID: W299347127