Measuring Firms’ Value Drivers

Abstract

Management accounting research has long sought to describe how firms identify and pursue value drivers, but the lack of consistent public data on internal activities limits empirical studies. We develop new text-based measures of firms’ financial and non-financial value drivers using archived public US firms’ websites (1995-2020) from the Wayback Machine. Using Kaplan and Norton’s (1992) balanced scorecard and Ittner and Larcker’s (2001) value-based management framework, we classify and construct standardized yearly measures of firms’ value drivers. Our measures vary over time with trends in the economy and management practices, both within and across industries, and capture related yet distinct constructs that inform firm strategy. We validate our measures by associating them with established financial and non-financial measures, and we also showcase their applications in accounting, finance and management research. Our paper provides researchers with a means to construct value-driver measures for any firm with current or historical websites.

Keywords: Management accounting, value drivers, firm strategy, measures