RECOGNIZING MACROECONOMIC FLUCTUATIONS IN VALUE BASED MANAGEMENT

Value Based Management (VBM) has become a common tool for evaluating corporate strategies and projects from the perspective of shareholder value maximization, and can be an important input for corporate compensation systems. But traditional VBM frameworks make no systematic effort to distinguish between changes in performance attributable to macroeconomic fluctuations beyond management's control and changes in performance that reflect the intrinsic competitive position of the firm. 2003 Morgan Stanley.