Guidepost to Wealth Creation: Value-Relevant Track Records

22 Pages Posted: 3 Jan 2008

See all articles by Bartley J. Madden

Bartley J. Madden

Center for Advancing Corporate Performance

Date Written: October 8, 2007

Abstract

In creating wealth, the corporate sector is hampered by weaknesses in the corporate governance system and the accounting system. The analysis presented in this paper supports recommendations that managements and boards (1) provide value-relevant, long-term track records for the firm and its major business units and (2) use these track records to explain how their key decisions are consistent with long-term value maximization. Potential benefits include: (a) expedited learning by managements and boards about connections between economic performance and shareholder value, (b) abandonment of quarterly earnings as a decision guide, (c) more productive dialogue among the board, management, and investors, leading to quicker and better decisions for maximizing shareholder value and (d) more attention by accounting rule-makers to the experiences of primary users of accounting data in dealing with measurement problems critical to wealth creation, such as the handling of intangible assets.

Keywords: Corporate Governance, Shareholder Value Review, Maximizing Shareholder Value

JEL Classification: D21, G34, G38, L21, M41, M44

Suggested Citation

Madden, Bartley J., Guidepost to Wealth Creation: Value-Relevant Track Records (October 8, 2007). Available at SSRN: https://ssrn.com/abstract=1080111 or http://dx.doi.org/10.2139/ssrn.1080111

Bartley J. Madden (Contact Author)

Center for Advancing Corporate Performance ( email )

565 West Adams
Chicago, IL 60661
United States

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