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2025-06-25 16:12 本頁(yè)面
【文章內(nèi)容簡(jiǎn)介】 ides a detailed discussion of CFROI. (3) Return on Invested Capital (ROIC)—ROIC is defined as the ratio of operating profits less adjusted taxes (NOPLAT) to invested capital. See Copeland, et al., (2020) for a more detailed discussion of ROIC. (4) Residual Ine (RI)—RI measures the excess earnings over a capital charge based on investment opportunities of similar risk. Stern Stewart amp。 Co. popularized RI under the market name of EVA. See Wallace (1997) for a more detailed discussion of RI. Despite the attention afforded valuebased management techniques and their widespread application, we have scant evidence on their ability to improve firm performance. Much of the existing empirical research, often conducted by the consulting firms who market valuebased management systems, focuses on the relations between the metrics (or valuedrivers) and shareholder value. These studies by consultants (., Stewart, 1994) document positive relations between performance metrics (., Economic Value Added (EVA)) and historical stockprice performance. In contrast, an academic study by Biddle, et al., (1997) concludes that EVA explains shareholder returns no better than earnings. Copeland (2020) argues that contemporaneous measures of mon valuebased management metrics do not do a good job of explaining changes in stock prices, and that changes in expectations need to be considered. Copeland’s argument underscores the difficulty in testing for any relation between the use of VBM systems and stock price improvement. Our sample selection method distinguishes our study from previous studies. These relevant studies only have access to data on VBM pensation plans for top executives, and exclude firms that use VBM systems for evaluation and budgeting (see Ittner and Larcker, 1998, 2020). Our sample includes firms that tie VBM to pensation, and also firms that use VBM systems for evaluation, budgeting, and monitoring but not for pensation. This feature allows us to explore the more extensive use of VBM, and also allows us to shed light on the endogenous decision process. Our sample also allows us to examine a broader group of valuebased management systems, rather than only systems based on the EVAtype measures of residual ine used in these prior studies. Our method makes three additional contributions. First, we extend our analysis of postadoption performance to five years beyond the year of adoption, allowing us to examine longerterm effects. Second, we use different tax rates based on the statutory tax rate in effect for a particular year as opposed to assuming a constant tax rate for all years. Third, we use a cost of equity based on the capital asset pricing model, a cost of debt based on Moody’s bond yields, and the firm’s capital structure to estimate a weighted average cost of capital for each of our sample firms, and for all firms with data available on COMPUSTAT, for matching purposes. This contribution allows us to more accurately estimate residual ine for each firm, to match firms more accurately, and to examine the contribution of changes in the cost of capital on postadoption performance. Effective corporate governance and financial control includes the use of monitoring and incentive mechanisms to encourage the creation of shareholder value. Valuebased management systems attempt to acplish this goal by providing managers with a set of decisionmaking tools that identify which alternatives create or destroy value, and often link pensation and promotions to metrics associated with shareholder value. Although the use of VBM has inc
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