literature review financial management

A Literature Review of Financial Performance Measures and Value Relevance

Conference paper
First Online: 30 December 2017
Cite this conference paper

Nattarinee Kopecká 2

Part of the book series: Springer Proceedings in Business and Economics ((SPBE))

2107 Accesses

3 Citations

Performance measurement comprises several metrics and applications used as a benchmark in business sectors for both internal and external users. For managers, it expresses whether company’s targets are reached and as a way of evaluating risks and returns for shareholders. A variety of performance measures are utilized to almost every operational process, and the area is rather vast. Therefore, the aim of the study is to find out what kinds of financial tools are better linked to market value. The result of the study shows that financial measures appear to be favorable measures for companies providing relevant and meaningful information to shareholders. Especially, return on investment (ROI) and earnings are significantly relevant to market value, while the superiority of EVA still remains unclear. Above all, companies still prefer traditional financial measures to other financial tools.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Institutional subscriptions

On the Examination of Value-Based Performance Measures: Evidence from Indian Firms

A Review of the Research on Financial Performance and Its Determinants

The Role of Financial Analytics in Decision-Making for Better Firm Performance

Alibad S, Dorestani A, Balsara N (2013) The most value relevant accounting performance measure by industry. J Account Finance. http://www.na-businesspress.com . Accessed 16 Jul 2016

Almasan AC, Grosu C (2010) Financial measures for performance measurements in a regulated environment. Paper presented at the 5th international conference on economy and management transformation, West University of Timisoara, Romania, 24–26 Oct 2010

Google Scholar

Barney JB (2002) Gaining and sustaining competitive advantage. Prentice Hall, Upper Saddle River

Black AP, Wright PD, Bachman JE (1998) In search of shareholder value: managing the drivers of performance. Financial Times Prentice Hall, London

Barton J, Hansen B, Pownall G (2010) Which performance measures do investor value the most and why? Account Rev 85:18–19

Article Google Scholar

Bhasin L (2016) Disclosure of EVA in the financial statement: experience of an asian economy. https://www.academia.edu . Accessed 22 Sept 2016

Ewoh AIE (2011) Performance measurement in an era of new public management. http://digitalcommons.kennesaw.edu . Accessed 10 Jul 2016

Francis J, Schipper K, Vincent L (2003) The relative and incremental explanatory power of earnings and alternative (to earnings) performance measures for returns. Contemp Account Res 1:121–164. https://doi.org/10.1506/XVQV-NQ4A-08EX-FC8A

Gentry RJ, Shen W (2010) The relationship between accounting and market measures of firm financial performance : how strong is it? J Manag Issues 22:514–530

Holthausen RW, Watts RL (2001) The relevance of the value-relevance literature for financial accounting standard setting. J Account Econ 31:3–75

Kaplan R, Norton D (1992) The balanced scorecard: measures that drive performance, vol 70. Harvard Business Reviews Press, Boston, pp 71–79

Kamath GB (2015) The impact of intellectual capital on financial performance and market valuation of firm in India. International Letters of Social and Humanistic Sciences. http://wwwscipress.com/ILSHS.48.107 . Accessed 18 Sept 2016

Knáplová A, Pavelková D, Chodúr M (2011) Měření a říyení výkonnosti podniku, Praha

Neely A, Mills J, Platts K, Gregory M, Richards H (1994) Realizing strategy through measurement. Int J Oper Prod Manag 14:52–140

Neely A, Gregory M, Platts K (2005) Performance measurement system design. A literature review and research agenda. Int J Oper Prod Manag 15:80–166

Patel RP, Patel M (2012) Impact of EVA on share price. International Journal of Contemporary Business Studies. A Study of Indian Private Sector Banks. https://ssm.com/abstract=2097467 . Accessed 12 Jul 2016

Pathirawasam C (2010) Value relevance of accounting information: evidence from Sri Lanka. Int J Res Commer Manag 8(1):13–20

Richard PJ, Devinney TM, Yip GS, Johnson G (2009) Measuring organizational performance: towards methodological best practice. J Manag. http://jom.sagepub.com/cgi/content/refs/35/3/718 . Accessed 20 Sept 2016

Shan YG (2014) Value relevance, earning management and corporate governance in China. http://www.business.adelaide.edu.au . Accessed 25 Jul 2016

Stewart GB (1994) EVA: fact and fantasy. J Appl Corp Financ 7(2):71–87. https://doi.org/10.1111/j.1745-622.1994.tb00406x

Sorter GH, Gans MS, Rosenfield P, Shannon RM, Streit RG (1974) Objectives of financial statements. American Institute of Certified Public Accountants, New York, pp 3–66

Venkatraman N, Ramanujam V (1986) Measurement of business performance in strategy research: a comparison of approaches. Acad Manag Rev 11:801–814

Download references

Acknowledgments

This paper has been dedicated to the research project "Analysis of strategic management ac-counting relation to company management and performance" (supported by Internal Grant Agency, No. IG 71/2017).

Author information

Authors and affiliations.

Department of Management Accounting, University of Economic, Prague, Nam. W. Churchilla 4, 130 67, Prague 3, Czech Republic

Nattarinee Kopecká

You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Nattarinee Kopecká .

Editor information

Editors and affiliations.

Faculty of Finance and Accounting, University of Economics, Prague, Prague, Czech Republic

David Procházka

Rights and permissions

Reprints and permissions

Copyright information

About this paper

Cite this paper.

Kopecká, N. (2018). A Literature Review of Financial Performance Measures and Value Relevance. In: Procházka, D. (eds) The Impact of Globalization on International Finance and Accounting. Springer Proceedings in Business and Economics. Springer, Cham. https://doi.org/10.1007/978-3-319-68762-9_42