What Are the Drawbacks of Using Total Return to Shareholders

question 85

Essay

What are the drawbacks of using total return to shareholders and firm market capitalization to measure firm performance?

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Definitions:

Reactance

A motivational reaction to offers, persons, rules, or regulations that threaten or eliminate specific behavioral freedoms.

Experimental Realism

The extent to which an experiment mirrors real-life experiences, enhancing its validity.

Mundane Realism

The degree to which an experiment or research study mirrors the real world, enhancing the generalizability of its findings to everyday situations.

Field Experiment

An experiment conducted in a real-world setting.