Shareholder Expectations Research Articles

KOMITE MANAJEMEN RISIKO, EKSTERNAL TATA KELOLA DAN KINERJA PERUSAHAAN

Good corporate governance can increase the value of a company by implementing a commitment to achieve predetermined goals. One of these goals is meeting the expectations of investors, shareholders, and other stakeholders to achieve maximum profit. This study aims to provide empirical evidence regarding implementing the Risk Management Committee and its impact on company performance. Organizations, as systems, constantly interact with their environment, which is influenced by individual psychology. The study uses a sample of 100 companies listed on the Indonesia Stock Exchange out of 848 as of March 2023. The Risk Management Committee's characteristics are measured by the team leader's number of members and the leader's family affiliation with the company's management. The level of competitiveness is calculated using the Hirschman-Herfindahl index. Multiple regression tests were conducted to examine these variables. The results show that the number of risk management committees and family affiliations has a negative impact on firm value, while the level of competitiveness has a positive effect. However, only the family affiliation of the chairman of the risk management committee significantly affects firm value. The study's limitation lies in measuring the Risk Management Committee's characteristics, and further research is needed with different measurements. The results of this study can be helpful for investors when making investment decisions and for companies when presenting non-financial information.

From gavels to algorithms: The Vidhii Partners GenAI evolution

Learning outcomes This case study exposes students to the process of decision-making given the market uncertainty, evolving shareholder expectations and other variables that executives and managers must consider ensuring business continuity and growth and helps students develop an appreciation of the impact emerging technologies are having on organizational digital transformation. This case study evaluates the strategic considerations for whitespace digital solutions into existing organizational operations, balancing innovation with core operating principles; exposes the students to the drivers of fostering a culture of innovation and employee buy-in during strategic digital transformation initiatives; and evaluates and appreciates the role of key stakeholders, such as customers, employees and executive management, in shaping a successful digital transformation strategy and promoting sustained business growth. Case overview/synopsis Vidhii Partners, a leading Indian law firm, grapples with the burgeoning demand for legal services in a rapidly evolving market. Traditional methods may struggle to keep pace, prompting Vikram Wadehra, a partner, to champion the adoption of Generative artificial intelligence (GenAI) technology. Vidhii Partners embarks on the development of two GenAI tools: VidAI, an AI-powered chatbot designed to democratize access to legal information, and VidAI Pro, a business-to-business offering aimed at streamlining legal research and drafting. Wadehra envisions these tools not only enhancing efficiency but also fostering a culture of legal awareness and generating new business opportunities. However, crucial decisions remain. Can Vidhii Partners bridge the potential gap between innovation and the firm’s established practices? How can they effectively integrate GenAI into their operations while ensuring user trust and employee buy-in? This case study presents a rich opportunity to explore the challenges and opportunities associated with digital transformation in the legal sector. Students will grapple with themes such as navigating market uncertainty, fostering a culture of innovation within a traditional organization and developing effective strategies for stakeholder management during change initiatives. Through the lens of Vidhii Partners’ GenAI journey, students gain valuable insights into the complexities of embracing disruptive technologies within a dynamic business landscape. Complexity academic level This case study is designed for masters level (MBA). Supplementary materials Teaching notes are available for educators only. Subject code CSS 11: Strategy.

A roadmap for affordable genetic medicines.

Twenty genetic therapies have been approved by the US Food and Drug Administration to date, a number that now includes the first CRISPR genome-editing therapy for sickle cell disease-CASGEVY (exagamglogene autotemcel, Vertex Pharmaceuticals). This extraordinary milestone is widely celebrated owing to the promise for future genome-editing treatments of previously intractable genetic disorders and cancers. At the same time, such genetic therapies are the most expensive drugs on the market, with list prices exceeding US$4 million per patient. Although all approved cell and gene therapies trace their origins to academic or government research institutions, reliance on for-profit pharmaceutical companies for subsequent development and commercialization results in prices that prioritize recouping investments, paying for candidate product failures and meeting investor and shareholder expectations. To increase affordability and access, sustainable discovery-to-market alternatives are needed that address system-wide deficiencies. Here we present recommendations of a multidisciplinary task force assembled to chart such a path. We describe a pricing structure that, once implemented, could reduce per-patient cost tenfold and propose a business model that distributes responsibilities while leveraging diverse funding sources. We also outline how academic licensing provisions, manufacturing innovation and supportive regulations can reduce cost and enable broader patient treatment.

Critically Discuss Whether and How Board Size Affects the Companys Decision-making

The board size affect the decision-making process and the effectiveness of the board (Dwivedi and Jain, 2005). The influence of board size on corporate risk-taking, investment decisions, dividend policy, and innovation remains inconclusive due to varying perspectives based on agency theory, resource dependence theory, and institutional backgrounds. As for firms’ decision-making, the company's goal is to maximize profits, so the company needs to make a series of reasonable decisions to meet the needs and expectations of shareholders in a specific environment . While smaller boards may facilitate risk-taking and investment strategy, larger boards offer diverse skills and experience for better decision-making, dividend expansion, and innovation. However, findings are limited by external factors, sample sizes, data biases, industry specificity, and cross-sectional nature of studies. Future research should consider continuous variables, larger samples, and longitudinal analysis to generalize findings across countries and industries.Therefore, in order to achieve this goal, the company needs to consider how to make decisions in the following directions, such as enterprise risk-taking, investment policy, financing policy, innovation policy and so on. This study mainly analyzes how the size of the board of directors affects the company's decision-making.

Duties of Board in Maximizing Shareholder Value During Acquisitions: A Comparative Analysis Between UK, US and China

Focusing on the legal and strategic frameworks in China, the United States (especially Delaware), and the United Kingdom, this paper provides a comparative analysis of the roles and responsibilities of corporate boards in maximizing shareholder value in the acquisition process. It explores the varied legal frameworks to set board responsibilities, the strategic roles of boards in decision-making, and the challenges in balancing the interests of boards and shareholders. This paper further discusses the importance of conflicts of interest between boards and shareholders, transparent communication, and ethical standards, and how these factors affect the realization of value in acquisition decisions. It highlights regional case studies to illustrate the practical application of these principles in different legal and cultural contexts, emphasizing the need for boards to navigate complex regulatory landscapes and shareholder expectations to drive successful acquisition outcomes. This entails adopting practices like enhanced due diligence, independent oversight, and transparent communication to navigate the complexities of global corporate governance effectively.

Effectiveness of Company Value Creation Based on Excess Market Value-Added Assessment

This article aims to assess the usefulness of excess market value added to equity as an external measure of company value creation from the perspective of meeting shareholder expectations. This measure compares the expected value as an increase in stock exchange capitalisation in relation to return on equity, equivalent to its cost, decreased by this capital, in relation to the actually achieved level of capitalisation. This paper investigates relations with other external and internal measures. This research is based on measuring value creation in WIG30 Warsaw Stock Exchange companies in 2017–2023. The assessment of the research results was based on mathematical statistics tools, the density measure and the taxonomic measure of similarity. The study tested four hypotheses. The results of this research showed that the excess measure does not distort market information and can be used to assess the effectiveness of shareholder value creation, taking into account shareholder expectations. Secondly, the paper pointed to an unsatisfactory level of value creation in WSE WIG30 companies. The negative assessment of value creation management refers both to effectiveness and efficiency. Thirdly, shareholders continue to use classical financial measures despite the existence of a wide spectrum of value measures. Fourthly, the paper points to the lack of theoretical equality between the market value added (an external measure) and capitalised economic value added (an internal measure). The presented research contributes to unbiased assessments of whether or not shareholder value is simultaneously created and realised in increased share prices (capitalisation) to a higher degree than shareholder expectations. Up to now, no such research studies have been conducted for Polish and foreign capital markets. The research methodology has practical applications in expectations-based management.

Unveiling greenwashing in Colombian manufacturing: A machine learning approach

Greenwashing is the misleading use of environmental claims to market non-eco-friendly products, a growing concern as environmentally conscious consumers seek eco-friendly options. This study aims to identify factors that allow the detection of “greenwashing” practices in Colombian companies across various industrial sectors holding certifications such as ISO14001, the Colombian environmental seal, the district environmental excellence program, or international/regional environmental certifications. We employed a quantitative, cross-sectional methodology using three machine learning algorithms (Decision Tree Classification, Random Forest, Logistic Regression) and the double machine learning technique to identify causal effects and significant variables. Additionally, a greenwashing indicator was formulated, considering two variables: (a) Presence of a comprehensive solid waste management plan, and (b) Presence of a water usage and conservation program. Our findings reveal substantial variations in the adoption of environmental management practices across diverse industrial sectors and regions in Colombia. It is noteworthy that our research emphasizes that: (i) companies with an environmental contingency plan and a monitoring program are less likely to engage in greenwashing; (ii) expenses for personnel dedicated to environmental protection activities and the investment and expenses related to air and climate protection also reduce the likelihood of greenwashing; (iii) companies in the manufacturing of non-metallic mineral products sector are more likely to engage in greenwashing. It was also found that a significant proportion of Colombian industrial companies with environmental certifications do not fully embrace sustainable practices, implying limited effectiveness of environmental certifications in the country (56,09%). This research contributes to the taxonomy of greenwashing by delving into various types identified in the literature. It sheds light on selective disclosure, emphasizing that mere certification without tangible actions can constitute greenwashing. The broadened concept of decoupling now includes not only meeting shareholder expectations but also failing to meet those set by certifications. Attention deflection involves diverting focus toward certifications rather than real investments in environmental practices. Deceptive manipulation occurs when certifications create a misleading perception without concrete actions. Additionally, dubious authorizations and labels are revealed, showcasing the vulnerability of eco-labels to fraud. The study enriches existing categories, viewing certifications as potential instruments for greenwashing, reinforcing the need for substantial, measurable actions to validate sustainability claims.

PENGARUH LEVERAGE, PROFITABILITAS, DAN PERENCANAAN PAJAK TERHADAP MANAJEMEN LABA

The study aims of this research is to analyse the impact of leverage, profitability, and tax planning on earnings management. The data used in this study are secondary data derived from the financial statements of companies listed on the Indonesian Stock Exchange (BEI) for the period 2019 – 2021. The research sample used 50 companies that met the criteria of a total of 216 companies with purposive sampling methods for the sample collection of the research. Data analysis using panel data regression, this study measurement using Econometric Views 12 (EViews 12). The results of this study show that the variable leverage projected by the Debt-equity ratio (DER) has a significant negative impact on earnings management. Variable profitability projected with Return on assets (ROA) has a significant positive impact on earnings management. Tax planning variables proxied with the Tax Retention Rate (TRR) do not affect earnings management. For the company to be able to define positive policies that can maintain the sustainability of the business and can meet the expectations of shareholders in earnings management.

The Effect of Cash Dividend Pay-out Policy on Stock Price Performance: A Case Study of Commercial Banks Listed in Dar es Salaam Stock Exchange

This study investigates the effect of the cash dividend pay-out policy on the stock price performance of commercial banks listed on the Dar es Salaam Stock Exchange (DSE) in Tanzania. The study was conducted in the United Republic of Tanzania, focusing specifically on commercial banks listed in DSE. The study population comprised eight financial reports of commercial banks listed in DSE from which a sample of five commercial banks were purposively selected. These financial reports served as secondary data sources for evaluating the effect of dividend pay-out policy on the stock price performance of the chosen banks during the period spanning from 2016 to 2022. Employing a correlation research design, this study adopted a quantitative research approach, and data analysis involved a combination of descriptive and inferential statistical techniques, supported by statistical software STATA. The panel data regression models of Fixed Effect and Random Effect were employed to analyse the panel data. The results of Hausman test were used to select the best model, where Random Effect model were found appropriate. Findings reveal that the cash dividend pay-out ratio has moderate and positive relationship with stock price performance. Likewise, Cash dividend pay-out ratio is statistically significant at 5% significance level in influencing the stock price performance at equal magnitude. This implies that the dividend pay-out ratio has significant effect on stock price performance, the fact which concurs with signalling theory. The increase in dividend pay-out is associated to increase in stock price performance and the decreasing dividend payments weakens stock price performance. The study recommends Tanzanian banks adopt a balanced dividend approach, considering financial stability and shareholder expectations. Future research should explore long-term dividend trends and decision-making processes with longitudinal and qualitative methods.

Analisis Arus Kas Operasi, Leverage, Likuiditas, Pertumbuhan Perusahaan terhadap Revaluasi Aset Tetap

The purpose of this study is to analyze the effect of operating cash flow, leverage, liquidity and company growth on fixed asset revaluation. In this study, there were 4 companies that met the criteria from a total observation of 46 companies with the object of research being transportation subsector companies listed on the Indonesia Stock Exchange (IDX) during the period 2014 to 2021. The results of this study indicate that the operating cash flow variable has a negative effect on revaluation. fixed assets, leverage has no effect on fixed asset revaluation. The variable liquidity has a negative effect on the revaluation of fixed assets. Taken together operating cash flow, Leverage, Liquidity and growth of the company significantly influence the revaluation of fixed assets. This research can be taken into consideration for investors and shareholders to be more careful in receiving financial statement information provided by companies in making investment decisions. For companies to be able to determine positive policies that can maintain business continuity and meet the expectations of shareholders.

Analisis Kinerja Keuangan Dengan Menggunakan Metode Economic Value Added (EVA) Pada PT Campina Ice Cream Industry Tbk Periode 2017-2021

PT Campina Ice Cream Industry Tbk is one of the food and beverage companies listed on the Indonesia Stock Exchange (IDX). The purpose of this study is to determine the financial performance of the company using the Economic Value Added (EVA) method. This type of research is descriptive qualitative, using financial statement data for 2017-2021 obtained from the company's official website and the IDX. The results of this study indicate that PT Campina Ice Cream Industry Tbk achieved a positive EVA value in 2017 and a negative EVA value in 2018-2021. A positive EVA value, or EVA > 0, means that the company is able to create added value, which indicates that the profit generated is able to cover the existing capital costs (Capital Charges), which means that the company is able to meet shareholders' expectations and the company's financial performance is said to be good. Conversely, a negative EVA value or EVA < 0, which means that the company has not been able to create value, indicates that the profit earned cannot cover the existing capital charges, which means that the company has not been able to meet the expectations of shareholders and the financial performance of the company is said to be not good.

FIRM-SPECIFIC RISK, GROWTH OPTIONS, AND INNOVATION RENT

The greater the firm-specific risk, the more valuable are the innovative opportunities underlying the growth options, and the greater the innovation rent. We examine whether firm-specific risk drives the firm’s innovation rent. We find that the firm-specific risk positively moderates the association between firm innovativeness and firm surplus. Innovation rent is the change in firm surplus per unit change in the knowledge capital (accumulated R&D stock). The firm surplus is the excess market value of the firm over shareholder expectations. We further examine whether the growth options embedded in the firm’s assets mediate the association between firm innovativeness and firm surplus. Growth options positively mediate the association between knowledge capital and firm surplus. The firm-specific risk enhances the value of innovative opportunities underlying the firm’s growth options that are exercised such that the firm earns a value surplus. Our results are consistent with the strategic rent model and emerging behavioural theory.

Hinduja Global Solutions Limited: rewarding the shareholders

Learning outcomes After working through the case and assignment questions, the learning outcomes of this study are to understand the dividend policy of a company; compare different types of dividends that a company may give; assess the impact of stock splits and the issue of bonus shares (stock dividends); compare cash dividend and buy-backs as methods of cash distribution to shareholders; evaluate the methods of cash distribution that may be appropriate for the company; and assess the trade-off between long-term value creation and shareholder expectations. Case overview/synopsis This case study presents the dilemma faced by Partha DeSarkar, the executive director and global CEO of Hinduja Global Solutions (HGS) Limited, a leading business process management (BPM) company. The company would have surplus cash of about US$1.2bn from the selling of its health-care service businesses. The company planned to invest a part of this cashflow into the company’s future growth, with some of it distributed among its shareholders. This case study provides an excellent opportunity for students to determine the best method for rewarding the shareholders. It allows students to compare various cash distribution methods. Students can examine in detail the process involved, the quantum of distribution, tax implications, financial implications, fundraising flexibility and valuation impact of available options. Complexity academic level This case study is best suited for senior undergraduate- and graduate-level business school students in courses focusing on corporate finance, financial management, strategic management and investment banking. Supplementary materials Teaching notes are available for educators only. Subject code CSS: 1 Accounting and Finance

Evaluation of Impact of ESG Rating and Environmental Performance Factors on the Level of Credit Risk and Shareholder Expectations of Companies in Carbon-Intensive Industries from BRICS Countries

The objective of the study was to evaluate the impact of ESG ratings, environmental (E) pillar scores and environmental performance metrics of non-financial companies from BRICS countries on their credit risks (measured by credit rating) and shareholder expectations (measured by enterprise value (EV) to sales multiple). Environmental performance metrics included emission scores, water efficiency scores, environmental management team scores and the ability to cope with climate risks scores. The relevance of the study is underpinned by the limited number of research in the field for BRICS countries and contradictory conclusions in research about the strength and direction of the influence of ESG factors onthe value and financial metrics of the companies. The ordered logit regression and OLS regression models were applied for credit ratings and EV/Sales multiple respectively. The sample included 206 companies from carbon-intensive industries from Brazil, China, India, South Africa and Russia for 2018-2021. Financial and ESG metrics were taken from Refinitiv while companies' credit ratings were taken from Moody’s and S&P. The results showed that the improvements in ESG and E-scores as well as environmental performance metrics hurt companies’ credit ratings. Conversely, the improvements in ESG, E-scores and environmental performance metrics had a positive impact on EV/Sales metrics. The latter confirms the TGMT (too-much-of-a-good-thing) effect of environmental performance as equity investors expect a positive effect from climate-related actions on equity performance in the long term.

Pengaruh Dari Good Corporate Governance Terhadap Nilai Perusahaan Dengan Menggunakan Meta Analisis

The purpose of this research is to integrate the influence of Good Corporate Governance (GCG) on firm value. Basically, the spirit and spirit of Good Corporate Governance (GCG) is viewed using the perspective of agency theory, intended so that management actions are in harmony with the goals and expectations of creditors and shareholders. This study uses a literature study with a meta-analysis extension that integrates a number of 20 published articles obtained using the PoP (Publish Or Perish) application. The limitation of the search for articles is based on the years 2012-2022, and applies inclusion inclusion criteria and the application of the keywords Good Corporate Governance and corporate value. The result of the integration is the implementation of Good Corporate Governance (GCG) which will assist the company in achieving high value, so that it will provide added value for shareholders in a sustainable manner in the long term.

Application of the Economic Value Added (EVA) Concept as a Measuring Tool for Financial Performance

This study aims to determine the application of Economic Value Added (EVA) to financial performance at PT. XL Axiata, Tbk. The sample in this study is the financial performance of PT. XL Axiata, Tbk for three years. This research method uses the documentation method. The data used in this study is secondary data obtained from financial reports on the Indonesian Stock Exchange website. The data obtained is then processed by simple regression. Based on the analysis that has been done, it can be concluded that the financial performance of PT. XL Axiata, Tbk. This can be seen from the EVA value, which continuously decreases yearly until it reaches a negative EVA value so that PT. XL Axiata, Tbk could not generate returns per the expectations of shareholders. Also, evaluating financial performance using the EVA method strongly supports assessing financial performance based on financial ratios. This performance appraisal method gives the result that PT. XL Axiata has continuously experienced a decline in financial performance. However, with EVA, shareholders can see the size of the return generated by PT. XL Axiata Tbk for shareholders and whether the rate of return follows the shareholders' expectations, exceeding the cost of capital for the investment it makes

Analysis of Economic Value Added (EVA) and Market Value Added (MVA) in Assessing the Performance of Sharia Financial Institutions (Case Study at PT Bank Sumut Syariah Tbk)

Financial performance is the result or achievement achieved by the company in a certain period which describes the level of the soundness of the company to assist investors or potential investors in making decisions. Assessment of the company's financial performance using the EVA and MVA methods describes the optimal level of return on wealth for the company and investors. The purpose of this research is to measure the financial performance of PT. Bank Sumut Syariah uses the EVA and MVA methods, to determine the amount of economic added value creation and wealth creation that has been generated by the company for creditors and shareholders. This research was conducted at PT. Bank Sumut Syariah for the 2017-2021 period in period studied, Bank Sumut Syariah experienced an increase and decrease in its operational and finances seen from its annual financial reports. Based on the results of the analysis of the value of financial performance using the EVA method, PT. Bank Sumut Syariah has succeeded in creating a positive EVA value for the company every year. Rp. 623,456 (in millions of rupiah) in 2017, Rp. 496,207 (in millions of rupiah) in 2018 experienced a decrease in EVA value from the previous year, Rp. 537,199 (in millions of rupiah) in 2019 the EVA value again increased, in 2020 Bank Sumut Syariah experienced a decrease in the positive EVA value of Rp. 506,628, in 2021 Bank Sumut Syariah has again succeeded in increasing the positive EVA value of IDR 608,185. Management has succeeded in meeting the expectations of both creditors and shareholders.

Corporate strategy, board composition, and firm value

AbstractThis study addressed a gap in the literature by investigating the link between corporate strategy and board composition and how it connects to firm value. Most studies have explored whether board structure predicts firm outcomes rather than the other way around even though firm strategy plays a significant role in structuring the board. The sample covered the period between 2013 and 2018 and included 20,677 firm‐year observations, on which we executed country‐industry‐year fixed‐effects regression analysis. We found that, first, cost leadership strategy was positively associated with board size, board independence, board gender diversity, and board tenure, whereas it was negatively associated with board skills. Second, differentiation strategy was positively associated with board size and board gender diversity. Third, the moderating effects revealed that while board size and board tenure negatively moderated between cost leadership and firm value, board skills positively moderated between cost leadership and firm value. On the other hand, while board size, board gender diversity, and board tenure positively moderated between differentiation and firm value, board skills negatively moderated between differentiation and firm value. The results were robust to an alternative firm value proxy and endogeneity concerns. These findings provide firms with the opportunity to better shape their board structure in line with their corporate strategies and shareholder expectations.

The Influence of Capital Intensity, Inventory Intensity, and Profitability on Tax Aggressiveness with Debt Levels as a Moderating Variable

This study's objective was to analyze the impact of capital intensity, inventory intensity, and profitability on tax aggressiveness, with debt level serving as a moderator. This study includes three independent factors, namely Capital Intensity, Inventory Intensity, and Profitability; one dependent variable, namely Tax Aggressiveness; and one moderating variable, namely Debt Level or Leverage. In this study, 17 firms out of a total observation of 45 companies with research objects on the LQ45 company index listed on the Indonesia Stock Exchange (IDX) from 2017 to 2021 met the inclusion requirements. According to the findings of this study, capital intensity has a beneficial effect on tax aggression. The variable inventory intensity has no positive impact on tax aggression. The unpredictable profitability has a favorable impact on tax aggressiveness. The association between capital intensity and tax aggression cannot be moderated by the variable of leverage. The association between inventory intensity and tax aggression cannot be moderated by the variable of leverage. The variable of leverage moderates in a positive way the association between profitability and tax aggression. This research can also be used to encourage investors and shareholders to receive financial statement information offered by companies with greater care when making investment decisions. For companies to be able to determine positive policies that can maintain business continuity and can meet the expectations of shareholders will carry out tax aggressiveness.

The Relationship between Strategic Targets and Measurement: Structuring a Calibration Model of Planning, Measuring, and Implementing Performance Considering Non-financial Factors

Institutions and sub-organizations that manage public funds show differences in many aspects, whether taking into account their tasks, financing, or structure. The difference is even greater when looking at an overview of organizations operating in the competitive sector. However, performance, its measurement and the management of changes based on these are the main characteristics of quality-oriented management. The issue is furtherly complicated by the topic of sustainability and its measurement ability and capacity. For the sake of sustainability, not only business processes but also administrative organizations must strive for excellence today. This is supported by the fact that the functioning of a value-oriented organization, and the development of its processes in accordance with it, can be characterized by a strategic perspective (that is, long-term targeted goals) and a “customer-oriented” approach. It would be too simplistic to assume that by measuring everything adequately and accurately, we can approach the authentic analysis and evaluation of performance, as in the case of a multinational giant, for example, this comprehensive and detailed coverage unnecessarily complicates the measurement system and inevitably leads to obstacles and errors. Based on professional approaches, good performance and the path to achieving it, as well as maintaining the results achieved, can be broken down into parts and, as such, we can strive to improve the whole by optimizing the parts. However, it is also a fact that the improvement of individual parts often contradicts each other, that processes can become dependent or even divergent, so perhaps we can achieve the most if we follow these from multiple dimensions, according to multiple points and principles, and consider the quality of the whole, as a unit, as a superior principle of part optimization. One significant element of this is that management defines and manages conscious action, that is, measures, then defines the expected in relation to reality: plans; directs the change process; measures the results; analyzes the effects; and at the same time places information in a decision-making hierarchy for the functioning and task fulfillment of the organization. This is also characterized by the maintenance of performance and the guarantee of sustainability.
 In the processes of public service institutions, if we want to identify the criteria for expected performance, starting from the social usefulness and the concept of good governance - that is, why it is important to provide tasks in the most convenient and qualitative way - we will get to the importance of good organization management, efficient and efficient operation, quality management, creation of added value, and professional activity. Through the measurement of processes and the management of changes and the sustainability of goals. (In the public sector, performance is interpreted in the 3E or 4E framework, that is, economy, efficiency, effectiveness, and equity give a deep segmentation of performance. ) In the competitive sector, apart from the profit-oriented goal system, performance is determined by the expectations of the market, social, ecological, or political-legal environment, its adaptation, and not only its momentary state but its sustainability. Performance can only be expressed in one or a few specific indicators or parameters in the rarest cases. Even in the most streamlined profile organizations, we are talking about a more complex problem. This study, starting from this thought, shows how performance management, a management tool (usually organizational measurement), its trained and applied model (GAP: Gain Advanced Performance) can be connected in practice, how a set of points represented in a competitive sector and a theoretical model of an administrative organization can be made accessible with what approach, and how this can contribute to the efficiency of organizations in terms of state and shareholder expectations.