An Overview of Firm Performance: A Close Look at the Literature of Corporate Governance and Firm Performance Reveals that Different Measures Have Been Used by the Researchers to Measure the Performance

Abstract

A close look at the literature of corporate governance and firm performance reveals that different measures have been used by the researchers to measure the performance. They classified those measurements mainly into accounting-based and market based indicators (Ebrahim Al-Matari, et al 2014). Performance measurement has great significance in effective management of an organization and in the enhancement of the processes since only measurable things is manageable. Hence, the enhancement of the organizational performance requires some measurements to determine the impact of the level of organizational effectiveness upon business performance. future research should use a combination measure of the firm performance that both accounting and market-based measures to accurately measure the firm performance. In fact, the accounting –based measure can reflect the past performance of the company while the market-based indicators help to anticipate the future performance (Ebrahim Al-Matari, et al 2014). However, some other measurements cannot capitalize under either accounting or marketing measurement such as shareholder return (total shareholder return, economic value added, etc.)”