New Method Reveals True Value of Companies Beyond Traditional Metrics
The article discusses how firms create and measure value, focusing on how different stakeholders are compensated for their contributions. The researchers suggest that traditional accounting metrics may not accurately reflect a firm's true value, and propose using methods like comparing output and input values, considering economic rewards for stakeholders, and looking at actual cash flows. They conclude that measuring a firm's value should take into account the interests of various stakeholders, as investors value cash generated by a firm more than accounting earnings.