Financial Performance Measures and Value Creation: the State of the Art

1. Front Matter

   Pages i-xi

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2. Criticism of the Accounting-Based Measures of Performance

   • Daniela Venanzi

   Pages 1-8

3. Competing Financial Performance Measures

   • Daniela Venanzi

   Pages 9-31

4. The Metrics War

   • Daniela Venanzi

   Pages 33-60

5. Concluding Remarks: Strengths and Weaknesses of the Economic Value Measures

   • Daniela Venanzi

   Pages 61-70

6. Back Matter

   Pages 71-73

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The choice of  financial performance measures is one of the most critical challenges facing organizations. The accounting-based measures of financial performance have been viewed as inadequate, as firms began focusing on shareholder value as the primary long-term objective of the organization. Hence, value-based metrics were devised that explicitly incorporate the cost of capital into performance calculations.  Despite the increasing emphasis on these value-based measures, no definitive evidence exists of which metric works better than others, and on the extent to which any of them is  superior to traditional accounting measures. In this scenario, the objective  of this book is contributing to the ongoing dialogue on the appropriateness of different financial performance measures, by providing a systematic and updated review of the major value-based measures, by highlighting their respective strengths and weaknesses  and  by comparing the main international empirical evidence on theireffectiveness. This book can  be a powerful tool for guiding managers and graduate students in the “tangled forest” of  the existing metrics, by providing them with the quick, but adequate knowledge for consistently adopting them.

• CFROI
• CVA
• DCF approach
• EM
• EVA
• Financial performance measurement
• Metrics war
• Residual income
• SVA
• Value creation
• Value-based measures

• , Department of Business & Law, University of Rome III, Italy, Rome, Italy

  Daniela Venanzi

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