Do key performance indicators derived from value-based management better predict total stockholder return than traditional performance indicators?

Matthias Olivier; Roland Wolf

doi:10.37075/FABA.2025.1.03

Authors

Matthias Olivier UCAM Universidad Católica de Murcia, Murcia, Spain https://orcid.org/0009-0000-2288-4001
Roland Wolf FOM University of Applied Sciences for Economics and Management, Essen, Germany https://orcid.org/0009-0009-5282-8815

DOI:

https://doi.org/10.37075/FABA.2025.1.03

Keywords:

Value Based Management, key performance Indicators, Value oriented performance measurement, Value Accounting

Abstract

Purpose: This study investigates whether key performance indicators derived from value-based management are able to better predict total stockholder return than traditional performance indicators.

Design/Methodology/Approach: A sample (n = 1388) is drawn from corporate indices in four European countries (France, Germany, Italy, and Spain). The explanatory power of traditional performance indicators and value-based performance indicators is compared with regard to total stockholder return.

Findings: It is found that in the sample, value-based performance indicators are not able to better explain total stockholder return than traditional performance indicators.

Practical Implications: The results suggest that companies should consider placing greater emphasis on performance indicators, as leveraging both traditional and value-based performance metrics could help improve understanding of stockholder returns and potentially drive more informed strategic decision-making.

Originality/Value: The study provides insights into the relative effectiveness of value-based performance indicators versus traditional ones in explaining stockholder return across multiple European countries.

Paper Type: Research Paper.

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