Resource margin accounting: An elucidation and preliminary empirical testing

Publication Type

Journal Article

Publication Date

2007

Abstract

The aim of this paper is to describe “resource margin accounting” (RMA) as a valuation framework in strategic analysis. The paper defines RMA as an improved framework for valuation in competitive strategy, relative to existing value-added and cash flow methods. The framework was tested on a sample of 300 US manufacturing companies between 1983 and 1998. The paper finds that the resource margin approach has greater explanatory power than traditional market-to-book valuation measures. The resource margin approach is methodologically and empirically superior to economic value-added (EVA) and cash flow models of valuation. The paper presents and tests a new valuation method: RMA.

Keywords

Cash flow, Economic value added, Resource management, Accounting, Strategic audit, resource margin accounting

Discipline

Business | Strategic Management Policy

Research Areas

Strategy and Organisation

Publication

Management Decision

Volume

45

Issue

3

First Page

420

Last Page

433

ISSN

0025-1747

Identifier

10.1108/00251740710745052

Publisher

Emerald

Additional URL

https://doi.org/10.1108/00251740710745052

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