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Financial performance. In search of self-evidence?

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  • Aldo Levy

    (CNAM - Conservatoire National des Arts et Métiers [CNAM] - HESAM - HESAM Université - Communauté d'universités et d'établissements Hautes écoles Sorbonne Arts et métiers université)

Abstract

Listed French companies have issued their first corporate accounts prepared under both French and IFRS standards. Restatement according to international standards, which was intended to bring the book value as close as possible to the financial value, has not yet yielded the anticipated transparency. The extent of the adjustment problem is suggested by examination of the consolidated corporate accounts of the companies comprising the CAC 40 (the leading French Stock Exchange Index). The analysis of financial performance shows no improvement in clarity; the example of Return On Equity and its value-creation process is discussed for companies making up the CAC 40. This shows that the Merton model, which was supposed to converge with the Medaf or CAPM model owing to the underlying fall in the cost of information, is actually moving away from it because of the re-valuation of the companies' asset bases.

Suggested Citation

  • Aldo Levy, 2006. "Financial performance. In search of self-evidence?," Post-Print halshs-01278150, HAL.
    • Handle: RePEc:hal:journl:halshs-01278150
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    Keywords

    IFRS - Return On Equity – Leverage.;

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