Financial Targeting for Public Enterprise: The Criterion of a Rate of Return to Capital

Abstract

The rate of return to capital employed is the most common of the control and perfor Mance measures used in the private sector. It is often suggested that public sector enterprises, particularly statutory trading authorities, should be compelled to adopt a target rate of return to encourage the efficient allocation of resources by such enterprises. This paper outlines the problem of such a control measure for public sector enterprises. It is difficult to conceive of any single line measure of perfor Mance for control that can be adopted for a non-competitive public sector enterprise that does not risk creating more problems than it solves.