Value Based Performance Measures: Theoretical Evaluation and Empirical Analysis of their Application and Value Relevance on a European Level.
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Disciplina/sAdministración y Dirección de Empresas
Materia/sAdministración y Dirección de Empresas
Organización y Gestión de Empresas
Companies’ actions are determined by VBM and Shareholder Value approach. Thus, they strive to earn a profit which covers the total cost of capital. The costs of capital play an important role as they are the hurdle rate for companies.2111 The widely used method of CAPM for cost of capital calculation is controversially discussed in the scientific literature and shows some flaws in its practical application. Due to the separation of ownership and control the Shareholder Value maximation is the primary goal of companies. The Principal Agent Theory is used to describe the behaviour of managers and shareholders under these circumstances. Both parties act opportunistically and due to information asymmetries managers can harm shareholders. In order to reduce information asymmetries and limit opportunistic behaviour monitoring, screening, selfselection, incentive systems and control systems are possible solutions. In this context key figures are an instrument as they help to reduce agency ...