【正文】 nt (CFROI)—CFROI expresses an estimate of a pany’s singleperiod cash flow as a percentage of total investment. Madden (1999) provides 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。原文 ： Financial Control Effective corporate governance and financial control includes the use of monitoring and incentive mechanisms to align divergent interests between shareholders and managers and encourage the creation of shareholder value. Valuebased management systems (VBM) provide an integrated management strategy and financial control system intended to increase shareholder value by mitigating agency conflicts. In concept, VBM reduces agency conflicts and helps create shareholder value since it reveals valueincreasing decisions to employees, allows for easier monitoring of managers’ decisions, and provides a method to tie pensation to outes that create shareholder value. However, the degree to which VBM systems actually improve the economic performance of publicly held firms is an open question. To gain insight into this issue, we examine the use and economic efficacy of valuebased management systems by 84 firms that adopt VBM systems from 1984 to 1997. We investigate two related research questions: (1) Does the adoption of a VBM system improve economic performance? And (2) What factors enhance or hinder the effectiveness of VBM systems? Our primary goal is to examine whether the adoption of a VBM system improves economic performance. We recognize that firm performance and the decision to tie pensation to a VBM metric can be endogenous, which creates a potential sample selection bias. For instance, firms that are performing poorly face tougher challenges to creating economic value and could be more likely to tie pensation to VBM to provide managers the incentives to overe these challenges. Alternatively, managers who expect to achieve a certain level of performance can negotiate a pensation contract based on the VBM metric that essentially assures a bonus payout. Our sample includes firms that base pensation on VBM metrics, but also firms that use VBM for analysis and evaluation only. Thus, we can examine why firms choose to tie pensation to VBM, which allows us to control for potential sample selection bias that results from endogenous relations between pensation plans and firm performance. With regard to our first research question, we find that firm performance increases following the adoption of valuebased management systems. Compared to a matched firm based on industry, prior performance, and size, firms that adopt VBM systems increase residual ine for the five years subsequent to the adoption of a VBM system relative to the year before adoption. The median firm in our sample increases industry and performanceadjusted residual ine divided by invested capital by over 7 percentage points for the fiveyear period subsequent to VBM adoption. We do not find evidence that VBM encourages underinvestment in highgrowth firms, suggesting that the improvement in residual ine does not e at the expense of longterm value. With regard to our second research question, we find that firm size is the only firm specific characteristic that relates to the effectiveness of VBM in all years. After controlling