财务控制外文翻译.docx
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财务控制外文翻译
原文:
FinancialControl
Effectivecorporategovernanceandfinancialcontrolincludestheuseofmonitoringandincentivemechanismstoaligndivergentinterestsbetweenshareholdersandmanagersandencouragethecreationofshareholdervalue.Value-basedmanagementsystems(VBM)provideanintegratedmanagementstrategyandfinancialcontrolsystemintendedtoincreaseshareholdervaluebymitigatingagencyconflicts.Inconcept,VBMreducesagencyconflictsandhelpscreateshareholdervaluesinceitrevealsvalue-increasingdecisionstoemployees,allowsforeasiermonitoringofmanagers’decisions,andprovidesamethodtotiecompensationtooutcomesthatcreateshareholdervalue.However,thedegreetowhichVBMsystemsactuallyimprovetheeconomicperformanceofpubliclyheldfirmsisanopenquestion.Togaininsightintothisissue,weexaminetheuseandeconomicefficacyofvalue-basedmanagementsystemsby84firmsthatadoptVBMsystemsfrom1984to1997.Weinvestigatetworelatedresearchquestions:
(1)DoestheadoptionofaVBMsystemimproveeconomicperformance?
And
(2)WhatfactorsenhanceorhindertheeffectivenessofVBMsystems?
OurprimarygoalistoexaminewhethertheadoptionofaVBMsystemimproveseconomicperformance.WerecognizethatfirmperformanceandthedecisiontotiecompensationtoaVBMmetriccanbeendogenous,whichcreatesapotentialsampleselectionbias.Forinstance,firmsthatareperformingpoorlyfacetougherchallengestocreatingeconomicvalueandcouldbemorelikelytotiecompensationtoVBMtoprovidemanagerstheincentivestoovercomethesechallenges.Alternatively,managerswhoexpecttoachieveacertainlevelofperformancecannegotiateacompensationcontractbasedontheVBMmetricthatessentiallyassuresabonuspayout.OursampleincludesfirmsthatbasecompensationonVBMmetrics,butalsofirmsthatuseVBMforanalysisandevaluationonly.Thus,wecanexaminewhyfirmschoosetotiecompensationtoVBM,whichallowsustocontrolforpotentialsampleselectionbiasthatresultsfromendogenousrelationsbetweencompensationplansandfirmperformance.
Withregardtoourfirstresearchquestion,wefindthatfirmperformanceincreasesfollowingtheadoptionofvalue-basedmanagementsystems.Comparedtoamatchedfirmbasedonindustry,priorperformance,andsize,firmsthatadoptVBMsystemsincreaseresidualincomeforthefiveyearssubsequenttotheadoptionofaVBMsystemrelativetotheyearbeforeadoption.Themedianfirminoursampleincreasesindustry-andperformance-adjustedresidualincomedividedbyinvestedcapitalbyover7percentagepointsforthefive-yearperiodsubsequenttoVBMadoption.WedonotfindevidencethatVBMencouragesunderinvestmentinhigh-growthfirms,suggestingthattheimprovementinresidualincomedoesnotcomeattheexpenseoflong-termvalue.
Withregardtooursecondresearchquestion,wefindthatfirmsizeistheonlyfirmspecificcharacteristicthatrelatestotheeffectivenessofVBMinallyears.Aftercontrollingforpossiblesampleselectionbias,wefindthatlargefirmsshowlessimprovementthansmallfirms.Wenote,however,thattheseregressionshavelowadjustedR2s.Possibly,thisresultsuggeststhatlargerfirmsfacegreatermonitoringcosts,whichmakeitmoredifficulttoimplementprogramsinlargerfirms.Inourmultivariateanalysis,wealsofindthat(i)firmsthatperformbetterpriortoadoptionaremorelikelytotiecompensationtoVBMand(ii)thepostadoptionadjustedperformanceinthefirsttwoyearsafteradoptionnegativelyrelatestotheuseofVBMtodeterminecompensation.Thiseffectisnotstatisticallysignificantaftertwoyears.ItispossiblethatfirmsthatalreadyfocusonvaluecreationaremorelikelytotieVBMtocompensationandthatthesefirmssimplyhavelesspotentialforimprovement.Alternatively,firmsmightcapbonuspayoutstoolowwhentheyimplementplans,whichreducesinitialefficacy.WealsofindthatfirmsreducecapitalexpendituresfollowingVBMadoption.Thesereductionsinspendingdonotdifferbasedonthefirms’growthopportunities.Thus,theimprovementinperformancedoesnotappeartocomeattheexpenseoflong-termvalue.
Overall,ourresultsprovidesupportthatvalue-basedmanagementsystemsareeffectivemechanismsforimprovingcorporateperformance.
Theliteratureonpropertyrights(e.g.,AlchianandDemsetz,1972)andagencytheory(e.g.,JensenandMeckling,1976)maintainsthatdifferentincentivesleadtoconflictsbetweenshareholdersandmanagersofthepublicfirmthatresultinalossinfirmvalue.Ultimately,theshareholdersbearthisloss.Value-basedmanagementprovidesanintegratedmanagementstrategyandfinancialcontrolsystemdesignedtomitigatetheseagencyconflictsandincreaseshareholdervalue.VBMsystemsattempttoaccomplishthisgoalbyprovidingmanagerswithasetofdecision-makingtoolsthat,atleastintheory,identifywhichalternativescreateordestroyvalue,andoftenbylinkingcompensationandpromotionstoshareholdervalue.Firmscanusethesemetricstomonitorandrewardmanagementperformance.Theyprovideamechanismforlinkingmanagers’decisionstofirmperformanceoutcomesthatcreateshareholdervalueandprovideameanstofurtheralignshareholderandmanagerialinterests.
Value-basedmanagementhascapturedtheinterestofthecorporateandinvestmentcommunities.RyanandTrahan(1999)reportthat87percentof86CFOssurveyedindicatethattheyarefamiliarwithvalue-basedmanagement.MostoftheseCFOsalsoindicatethattheirfirmusesoneormoreVBMsystems.Thisinteresthasalsobeendemonstratedinthebusinesspress.ArticlesinFortune(e.g.,Stires,2001;Colvin,2000;Tully,1999)includealistof1,000companiesrankedbyhowmuchmarketvaluetheyaddedduringthepastdecade,basedonSternStewart’smarketvalueadded(MVA)metric.Thesearticlesprofileseveralcorporationsthathaveadoptedavarietyofmanagementsystems,basedondifferentVBMmetrics,inanefforttoincreasetheirvalue.
WeidentifyfourvariationsofVBMmetricsfromthesearticlesinthepopularpress.Allofthemetricsaresimilarinthattheyaresingle-periodmeasuresofperformancethattakeintoaccountreturnoninvestedcapitalandtherelevantcostofcapital.Theyareallconsistentwithdiscountedcashflowvaluation.Althoughconsultingfirmshavepopularizedthesemetrics,manycompaniesapplytheirownversionsofthemetrics.Wedonottakeanygivenmetrictorepresenttheworkofaconsultingfirmthatmayhavepopularizedthemethod.Weprovideasummaryofthesefourmetricsbelow:
(1)DiscountedCashFlow(DCF)—DCFmethods,forinstanceshareholdervalueadded(SVA),expressvalueasexpectedfuturecashflowsdiscountedtothepresenttimeatthecompany’scostofcapital.SeeRappaport(1998)foramoredetaileddiscussionofDCFmethodsastheyrelatetovalue-basedmanagement.
(2)CashFlowReturnonInvestment(CFROI)—CFROIexpressesanestimateofacompany’ssingle-periodcashflowasapercentageoftotalinvestment.Madden(1999)providesadetaileddiscussionofCFROI.
(3)ReturnonInvestedCapital(ROIC)—ROICisdefinedastheratioofnetoperatingprofitslessadjustedtaxes(NOPLAT)toinvestedcapital.SeeCopeland,etal.,(2000)foramoredetaileddiscussionofROIC.
(4)ResidualIncome(RI)—RImeasurestheexcessearningsoveracapitalchargebasedoninvestmentopportunitiesofsimilarrisk.SternStewart&Co.popularizedRIunderthemarketnameofEVA.SeeWallace(1997)foramoredetaileddiscussionofRI.
Despitetheattentionaffordedvalue-basedmanagementtechniquesandtheirwidespreadapplication,wehavescantevidenceontheirabilitytoimprovefirmperformance.Muchoftheexistingempiricalresearch,oftenconductedbytheconsultingfirmswhomarketvalue-basedmanagementsystems,focusesontherelationsbetweenthemetrics(orvalue-drivers)andshareholdervalue.Thesestudiesbyconsultants(e.g.,Stewart,1994)documentpositiverelationsbetweenperformancemetrics(e.g.,EconomicValueAdded(EVA))andhistoricalstock-priceperformance.Incontrast,anacademicstudybyBiddle,etal.,(1997)concludesthatEVAexplainsshareholderreturnsnobetterthanearnings.Copeland(2002)arguesthatcontemporaneousmeasuresofcommonvalue-basedmanagementmetricsdonotdoagoodjobofexplainingchangesinstockprices,andthatchangesinexpectationsneedtobeconsidered.Copeland’sargumentunderscoresthedifficultyintestingforanyrelationbetweentheuseofVBMsystemsandstockpriceimprovement.
Oursampleselectionmethoddistinguishesourstudyfrompreviousstudies.TheserelevantstudiesonlyhaveaccesstodataonVBMcompensationplansfortopexecutives,andexcludefirmsthatuseVBMsystemsforevaluationandbudgeting(seeIttnerandLarcker,1998,2001).OursampleincludesfirmsthattieVBMtocompensation,andalsofirmsthatuseVBMsystemsforevaluation,budgeting,andmonitoringbutnotforcompensation.ThisfeatureallowsustoexplorethemoreextensiveuseofVBM,andalsoallowsustoshedlightontheendogenousdecisionprocess.Oursamplealsoallowsustoexamineabroadergroupofvalue-basedmanagementsystems,ratherthanonlysystemsbasedontheEVA-typemeasuresofresidualincomeusedinthesepriorstudies.
Ourmethodmakesthreeadditionalcontributions.First,weextendouranalysisofpost-adoptionperformancetofiveyearsbeyondtheyearofadoption,allowingustoexaminelonger-termeffects.Second,weusedifferenttaxratesbasedonthestatutorytaxrateineffectforaparticularyearasopposedtoassumingaconstanttaxrateforallyears.Third,weuseacostofequitybasedonthecapitalassetprici