Value-based performance measures METHODOLOGY

1799 measures, are more highly correlated with stock returns than traditional accounting measures, but whether its usage towards internal decision-making, performance measurement and compensation purposes improves organizational performance Ittner Larcker, 1998. A further related issue is whether the performance implications of the value-based performance measures depend upon how the measures are used within the organization, for example in capital budgeting, goal setting, investor communication, business planning, compensation and financial management purposes. As such, this study aims to investigate the performance of the organization upon adoption of value-based performance measures and also how these measures are used within the organization. This will be able to provide some direction as to the long-term benefits from the adoption of such value-based performance measures.

3.3 Corporate Governance within the emerging markets

There is a growing expectation that corporate boards should be overseeing the quality of internal management and the strategic decisions and pursuits of their companies Abdullah, 2004; Agrawal Knoeber, 1996. How far the characteristics of corporate boards influence management control has not been subjected to extensive research, particularly the differentiating effects of foreign versus domestic board membership has received only scant attention so far Choi Hasan, β005; Gulamhussen Guerreiro, β009; Oxelheim Randøy, 2003. Gulamhussen Guerreiro 2009 studied the influence of foreign equity and board membership on corporate strategy and internal cost management of 1800 domestic banks in Portugal. Foreign equity and board membership affect managerial choices and hence, as corporate governance mechanisms, influence the strategic decisions, pursuits and cost control outcomes. They call for future extension of their study to test their main hypotheses in other markets that have undergone some liberalization. In particular, in markets experiencing increasing globalization of foreign element of corporate governance will be a fruitful area for future research. As such, this proposed study responds to this call by investigation within the 5 emerging markets from South East Asia: Singapore, Malaysia, Indonesia, Philippines and Thailand.

3.4 Hypotheses

Based on the review of past literature above, this proposed study will investigate the relationship between corporate governance and value-based performance measures new management accounting techniques or innovations within the specific setting of emerging markets. The impact of this on firm value will be explored. The following hypotheses is developed: H1: Higher foreign shareholder‘s equity holdings will lead to adoption of value- based performance measures. H2: Higher composition of foreign outside board membership will lead to adoption of value-based performance measures H3: Firms with low insider management ownership will lead to adoption of value-based performance measures.