In both finance and accounting, the Return On Equity (ROE) is considered a biased indicator of economic profitability. Opposing this view, this paper shows that an appropriate mean of ROEs signals shareholder value creation. This implies that the notion of Market Value Added may be replaced by...

This paper examines the use of the Integrated ABC-and-EVA Information System for the management of new technology projects. The advantages of integrating the Activity-Based Costing system with the Economic Value Added financial performance measure and the positive impacts of this integration on...

Selecting relevant Key Performance Indicators involves an assessment of both cost- and revenue-driven measures. Cost driven allocation usually predominates, due primarily to a traditional accounting mindset coupled with the need for cost savings in the current economic environment. Using data...

Selecting relevant Key Performance Indicators involves an assessment of both cost- and revenue-driven measures. Cost driven allocation usually predominates, due primarily to a traditional accounting mindset coupled with the need for cost savings in the current economic environment. Using data...

We examine the effect of IFRS on the use of accounting-based performance measures for evaluating and rewarding managers. We show that post-IFRS firms decrease the weight of Earnings-per-Share (EPS) based performance measures in CEO pay contracts. We provide indications that IFRS add “noise”...

This paper presents a theoretical framework for valuation, investment decisions, and performance measurement based on a nonstandard theory of residual income. It is derived from the notion of “unrecovered” capital, which is here named “lost” capital because it represents the capital...

We offer evidence that the use of Relative Performance Evaluation (RPE) in CEOs' incentive contracts influences the effect of risk-taking incentives on both the magnitude and composition of firm risk. We find that when the incentive design lacks RPE features, the incentive portfolio vega...

This study analyzes the impacts of information on relative performance evaluations and the efficiency of accounting information systems for agencies in which multiple agents individually exert efforts confronting correlated uncertainties. When a public signal provides garbled information of an...