Performance as Value Creation

1.5 Credits · Level: Graduate, Juris Doctor

This course examines how to measure the amount of value that a business creates for its stakeholders. We will learn how to calculate the most commonly used measures of financial performance, paying particular attention to return on invested capital and economic profit. We will critically evaluate the choice of measures for incentive compensation purposes and appreciate how this choice links managers’ decisions with value creation. We will then learn how to set performance targets and use deviations from targets to assess performance. We will end by studying the rationale behind measuring non-financial performance. Throughout the course, we will use the on-going controversies surrounding corporate governance and executive compensation to illustrate our learning objectives.