Do key performance indicators derived from value-based management better predict total stockholder return than traditional performance indicators?

Purpose: This study investigates whether key performance indicators derived from value-based management are able to better predict total stockholder return than traditional performance indicators. Design/Methodology/Approach: A sample (n = 1388) is drawn from corporate indices in four European countries (France, Germany, Italy, and Spain). The explanatory power of traditional performance indicators and value-based performance indicators is compared with regard to total stockholder return. Findings: It is found that in the sample, value-based performance indicators are not able to better explain total stockholder return than traditional performance indicators. Practical Implications: The results suggest that companies should consider placing greater emphasis on performance indicators, as leveraging both traditional and value-based performance metrics could help improve understanding of stockholder returns and potentially drive more informed strategic decision-making. Originality/Value: The study provides insights into the relative effectiveness of value-based performance indicators versus traditional ones in explaining stockholder return across multiple European countries. Paper Type: Research Paper.