IDEAS home Printed from
   My bibliography  Save this paper

Earnings, Cash Flows and Value-Added as Performance Metrics: an International Comparison


  • Cormier, D.
  • Magnan, M.
  • Zeghal, D.


The measurement of a firm's performance is a crucial issue for many of its stakeholders: shareholders, directors, managers and debtholders. In addition, the effectiveness of many management systems (performance evaluation, compensation, strategy implementation) as well as their impact on value creation depends on the selection of an appropriate performance metric. This study purports to compare the ability of five performance metrics to capture value and value creation. These measures are net earnings, operating earnings, cash flows from operations, residual income and value added. Since country-specific standards and regulations influence the computation of performance metrics, the sample comprises firms from four countries: the United States, Canada, France and Switzerland. Results suggest that the value relevance of a performance metric as well as its predictive ability depends on a country's financial measurement and reporting environments. A financial reporting environment that is investor-focused and less restrictive enhances the power of performance metrics to explain a firm's value or financial prospects. In contrast, a national accounts focus and a more restrictive reporting environment reduce the explanatory power of performance metrics.

Suggested Citation

  • Cormier, D. & Magnan, M. & Zeghal, D., 1999. "Earnings, Cash Flows and Value-Added as Performance Metrics: an International Comparison," Papers 99-03, Ecole des Hautes Etudes Commerciales de Montreal-.
  • Handle: RePEc:fth:etcomo:99-03

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    More about this item



    JEL classification:

    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fth:etcomo:99-03. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Thomas Krichel). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.