Financial measures for performance measurement in a regulated environment

Abstract

Built on the concepts of performance measurement systems developed in the management accounting literature, the paper is primarily a conceptual approach on the issue of financial measures used to measure performance in a specific organizational context. Choosing the appropriate measures for performance measurement is a sensitive issue, since they must be linked to organization strategy in order to ensure successful implementation of strategy. This paper addresses these issues in the context of companies activating in a highly regulated sector, such telecommunications, which raises other problems regarding performance measurement. It also explains the advantages and disadvantages of exclusive use of financial ratios calculated on the basis of the information provided in the accounting system, which is past-oriented, while value creation must be future oriented. Key-Words: performance measurement, financial measures, investment centers, internal transfers, invested capital, return on investment, economic value added

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