Alternative Rate of Return Concepts and Their Implications for Utility Regulation

Solomon, Ezra

doi:10.1016/b978-0-08-019605-3.50041-9

Cited by 28 publications

(4 citation statements)

References 5 publications

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“…While many different operationalizations of shareholder value creation, or firm performance, could have been used, we chose MVA for a variety of reasons. First, accounting measures of firm performance are inherently more short term in nature (Briloff, 1972(Briloff, , 1976Fisher and McGowan, 1983;Hayes and Abernathy, 1980;Ouchi, 1980), tap only historical aspects of performance (McGuire, Schneeweis, and Hill, 1986) and are subject to a great degree of manipulation by managers (Bentson, 1982;Briloff, 1972Briloff, , 1976Fisher, 1979;Livingstone and Salamon, 1971;McGuire et al, 1988;Solomon, 1970;Zimmerman, 1978, 1990). Therefore, accounting measures of performance, such as Return on Assets and Return on Equity, are less useful for the project at hand because they are not successful in capturing the long-term value of the company or value created for shareholders.…”

Section: Variable Operationalizationmentioning

confidence: 99%

Shareholder value, stakeholder management, and social issues: what's the bottom line?

2001

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We test the relationship between shareholder value, stakeholder management, and social issue participation. Building better relations with primary stakeholders like employees, customers, suppliers, and communities could lead to increased shareholder wealth by helping firms develop intangible, valuable assets which can be sources of competitive advantage. On the other hand, using corporate resources for social issues not related to primary stakeholders may not create value for shareholders. We test these propositions with data from S&P 500 firms and find evidence that stakeholder management leads to improved shareholder value, while social issue participation is negatively associated with shareholder value. Copyright © 2001 John Wiley & Sons, Ltd.

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Section: Variable Operationalizationmentioning

confidence: 99%

Shareholder value, stakeholder management, and social issues: what's the bottom line?

2001

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“…The key difficulty is that the accounting rate of return associates current profit flow with a wide spectrum of prior investments, while economic rates of return must associate specific future flows with current investments. On the biases in accounting measures of profitability see Solomon (1970), Stauffer (1971), Fisher and McCowen (1983), Benston (1985), Salaman (1985) and Fisher (1 987). endogeneous variables in the model.…”

Section: Structural Analysismentioning

confidence: 98%

Competition for Monopoly, I: Cartelization

Krouse

1991

Bulletin of Econ Res

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The standard 'theory of monopoly' is not the theory of how firms acquire and sustain monopoly. It is, rather, a theory about how price is determined once it is agreed to focus on a single firm. In this case the freedom from market interaction -the given demand from which the seller chooses price-quantity pairs -comes by construction. This theory of monopoly pricing is straightforward and developed in all microeconomic theory textbooks. The theory of how firms acquire and sustain some degree of monopoly is a much more complex subject. This theory of competition for monopoly in a dynamic economy, with increasing costs of information, disparate technologies and political environments, and a variety of strategy sets is the stuff of modern industrial economics. While the classical theory of monopoly pricing is well-defined, precise, and generally lacking in application, the theory of competition for monopoly has loose ends, complexity, and a rich empirical and policy content.The tradition in industrial economics has been to consider the static, single-seller monopoly and large-numbers perfect competition solutions as polar cases and to characterize industry solutions that lie between these poles as expressing some degree of monopoly power. It has also been traditional to think of monopoly as resulting from cooperation among firms and to equate the competitive solution with non-cooperative behavior. Market solutions which express monopoly power are then thought to involve some degree of cooperation.' The usual corrollary is that the rise and fall of monopolies relates directly to those things which facilitate or undermine cooperative agreements. One of the principal teachings of modern industrial economics is that that tradition is misleading. There are more rules to the market game than are captured by simply specifying cooperative or non-cooperative play.Consider for example, and as a benchmark more generally, the perfectly competitive equilibrium. Given regularity in demand and cost functions, one set of rules for reaching this equilibrium includes non-cooperative Nash-in-price play, one market period with simultaneous decision-making,

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“…The predominant published literature on financial litigation focuses on the valuation of business entities and human capital, rate of return regulation, and damage valuation resulting from contract violation. While business/human capital valuation and rate of return regulation have received considerable attention (for businesdhuman capital valuation see Baldwin and Mason, 1983;Beranek, 1977;Michel andShaked, 1982 and1988;and Kahn 1986; and for rate of return regulation see Gordon, 1977;Kolbe, 1985;Marcus, 1986;and Solomon, 1970), the issue of damage valuation has received virtually no consideration. Yet it is an increasingly important area of corporate litigation.…”

Section: Introductionmentioning

confidence: 98%