LONG-TERM COMPETITIVENESS BASED ON VALUE ADDED MEASURES AS PART OF HIGHLY PROFESSIONALIZED CORPORATE GOVERNANCE MANAGEMENT OF GERMAN DAX 30 CORPORATIONS

Abstract

This paper shows how long-term value added driven competitiveness is widely adopted by German DAX 30 corporations and how it can be measured.It explains and shows how different measures such as shareholder value, economic value added (EVA), return on capital employed (ROCE), return on equity (ROE) and others are calculated and how they correlate to show longterm value added and, therefore, competitive differentiation.As part of the highly professionalized corporate governance approach, the German Corporate Governance Codex (Regierungskommision Deutscher Corporate Governance Kodex, 2015) asks for "sustainable creation of value".The analyses of 2015 and 2016 annual reports of all 30 corporations state that 80% of the firms show financially relevant value added data and as such measurable competitive advantage on the long run.The paper focuses on which measures are used to quantify the competitive value addition and then shows how EVA or company specific EVA-like measures in addition to ROCE are the most used ones.Furthermore, the paper shows that ROCE with a factor of 0.97 in 2015 and 0.74 in 2016 correlates best with EVA and, in absence of an EVA calculation, is the best measure to represent value creation as a competitive differentiator.The results can be useful to strengthen competitiveness for policymakers both in non-profit and for-profit social economy entities.

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