Resource margin accounting: An elucidation and preliminary empirical testing

Resource margin accounting: An elucidation and preliminary empirical testing

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 o...

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Bibliographic Details
Main Authors: JOHNSON, Peter, THOMAS, Howard
Format: text
Language:English
Published: Institutional Knowledge at Singapore Management University 2007
Subjects:
Cash flow
Economic value added
Resource management
Accounting
Strategic audit
resource margin accounting
Business
Strategic Management Policy
Online Access:https://ink.library.smu.edu.sg/lkcsb_research/3947
https://doi.org/10.1108/00251740710745052
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Institution: Singapore Management University
Language: English
Description
Summary: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.

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