Measurement of Firm Performance

Presentor Biography

Trevis Certo is the Jerry and Mary Anne Chapman Professor of Business in the Department of Management and Entrepreneurship at W. P. Carey School of Business, a top-ranked research-intensive institution. He investigates the impact of corporate governance structures and top management teams on firm performance, especially in the context of initial public offerings. Certo’s work is featured in premier journals including the Strategic Management Journal, Academy of Management Journal, and Academy of Management Review. His research has garnered attention in prominent media outlets such as Businessweek, The New York Times, The Wall Street Journal, and The Washington Post. Certo also offers strategic planning consultation and holds editorial positions in the Academy of Management Journal, Strategic Management Journal, and Academy of Management Learning & Education.

Abstract

Firm performance represents arguably the most important construct in strategic management research. In this talk, I will summarize recent studies examining some of the empirical irregularities associated with measures of performance. In particular, I will discuss the issues associated with using performance variables measured with ratios in statistical models, the differences in how executives and strategy scholars tend to operationalize firm performance, and the extreme non-normality associated with firm performance measures. I close by providing recommendations for scholars examining firm performance in statistical models.

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