@techreport{Velthuis2004Value,
abstract = {Earnings less riskfree Interest Charge (ERIC) is a new residual income concept for
Value Based Management (VBM), which takes the true risk and time preferences of
shareholders into account. In this paper management based on ERIC is discussed
from a theoretical and from a more practical point of view. Starting in a theoretical
world it is shown that ERIC fulfills the specific basic theoretical requirements in all
areas of VBM. In particular using ERIC in VBM ensures that planing, performance
measurement, management incentives and decentralization are goal congruent with
respect to market value. In a second step market imperfections and diverging preferences
of managers, which lead to conflict of interest between individual shareholders
and between management and shareholders, are considered. Accounting principles
for determining residual income as ERIC are established. It is shown that regarding
these accounting principles can substantially diminish conflict of interest and enhance
shareholder value.},
author = {Louis John Velthuis},
copyright = {http://www.econstor.eu/dspace/Nutzungsbedingungen},
keywords = {G31; M41; M52; 330; value based management; residual income; accrual accounting; incentives; performance measurement; Wertanalyse; Shareholder Value; Erfolgsrechnung; \"{O}konomischer Anreiz; Betriebliche Kennzahl; Theorie; performance measurement},
language = {eng},
number = {127},
title = {Value Based Management auf Basis von ERIC},
type = {Working paper series / Johann-Wolfgang-Goethe-Universit\"{a}t Frankfurt am Main, Fachbereich Wirtschaftswissenschaften : Finance & Accounting},
url = {http://hdl.handle.net/10419/27770},
year = {2004}
}
