Performance monitoring systems

Introduction: This page is the main page for information about performance monitoring systems / performance measurement systems. These systems are of major importance in corporate governance because their design affects the incentives of managers and thereby the efficiency of the firm. They are defined as the systems that makes it possible for the firm's constituencies to gather and analyze information about the firm. Prominent examples are the corporate disclosure rules and the discounted cash flow approach used to estimate fundamental corporate value. Classic references on performance monitor systems are Jensen and Meckling [1976], Copeland, Koller and Murrin [1996].

Content

General section

• Table: Effects of performance monitoring systems on corporate performance and other other kinds of institutions of relevance for corporate governance.
• Table: International corporate governance - Tentative characterizations of legal and empirical state of large firm performance monitoring systems in various countries as of 1980-95: 1) Developing countries. 2) Germany. 3) Japan. 4) Anglo-American countries. 5) Denmark.
• Exhibition: Major kinds of monitoring in the governance of large firms.
• Exhibition: How corporate returns (or performance) are linked with the various corporate resources.
• Exhibition: How a performance event effect the measurement of accounting returns versus market returns.
• Model: Perfect capital markets - Fisher separation theorem.

Special section on stock price theory

• Exhibition: Why the equilibrium stock price is fluctuating.
• Exhibition: Why tough disclosure laws / rules decrease stock price fluctuations.
• Exhibition: Why excessively dispersed ownership increases stock price fluctuations.

• Exhibition: Private or public ownership - The effect on enterprise valuation.

Special section on fundamental value analysis

• Presentation: Fundamental value analysis.
• Exhibition: Fundamental value analysis - The big picture.
• Exhibition: Sensitivity - Discounted cash flow framework.
• Exhibition: Deciding on fundamentals - The stylized case of credit ratings.
• Model: The General Cash Flow Model.
• Model: The CAP-model (CAPM).
• Table: Definitions - Certainty, risk and uncertainty.
• Table: Essential accounting statistics.