Abstract
Abstract: As value‐based (VB) performance measures include firms’ cost of capital, they are considered more congruent than earnings measures. Prior studies, however, find that their use for managerial performance evaluation is less extensive than their presumed benefits would suggest. We examine how the importance of VB measures for evaluation varies with firms’ need and managers’ opportunity to manage capital costs, and find this to increase with a need for intensive asset use, delegated authority and reduced unit interdependencies. In addition, importance of intensive asset use simultaneously limits the delegation of authority, partially offsetting the increase in importance of VB measures.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
