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Opportunities for shareholder value creation from deep decarbonization in fossil fuel and related industries may be unlocked with a permanent change in corporate governance practices. The purpose of this study is to highlight the conceptual links between corporate collaborations, decarbonization and equity value creation to enable the large-scale reallocation of funds necessary to halve carbon emissions by the end of this decade.

Consistent with shareholder value maximization, the author uses the constant dividend growth framework to show that a permanent change in corporate governance practices can impact expectations of future cash flows and required rates of return. This study includes a simulation to explore how perpetual corporate collaborations on decarbonization that influence the key equity value drivers can add value to the equity of collaborative firms.

Perpetual corporate collaborations with key stakeholders focused on equity value drivers hold great potential for accelerating the reallocation of funds to low-carbon assets. Simulation results suggest that relatively small changes, especially in required rates of return, may result in substantial increases in equity values for collaborative leaders in deep decarbonization.

This study identifies new sources of shareholder value from long-term corporate collaborations with key stakeholders on deep decarbonization. A collaborative focus on important equity value drivers can attract capital also to hard-to-abate industries and initiate sharp cuts in carbon emissions. Corporate governance practices, thus, reformed render shareholder value creation incentive compatible with rapidly decarbonizing global supply chains, making it possible to meet climate action goals by 2030.

The purpose of this study is to consider the limitations of traditional finance and to provide an overview of the challenges associated with the developing area of sustainable finance. In the context of multiple global systemic threats to humanity, the author argues that societal values must play a prominent role in calling for comprehensive government policy and activating the fund allocations required to safeguard the stability of multiple societal systems.

This study integrates research results from several disciplines to show that value-based finance is essential for ensuring that information acquisition, government policies and fund allocations support the stability of multiple systems on which society depends. The discussion is informed by research that documents massive uncertainty in planetary and biological processes requiring urgent action.

Traditional finance allows prioritization of financial returns at the expense of environmental and social stability with potentially catastrophic and irreversible consequences. To safeguard the stability of societal systems, fund allocation decisions by individuals and organizations must prioritize societal values, as they relate to the United Nations Sustainable Development Goals and the science needed to achieve them.

This study provides a novel view of the critical importance of societal values in finance given growing global threats to the stability of multiple, interconnected systems. It offers a unique perspective by drawing on research results from multiple disciplines to highlight an essential role for science-based information related to societal values in the engagement and fund allocation decisions of all market participants operating under extreme uncertainty.

The purpose of this paper is to evaluate firm financial success across a broad range of performance measures and identify areas of the performance spectrum for which positive results were most difficult to achieve. Simultaneously, the authors identify the firms that most frequently ranked among the top five in terms of composite financial performance.

The dichotomous Rasch model was applied to 13 financial ratios for two industries for the years 2002‐2011. Of these ratios, the authors identify those that are consistent with the requirements of the Rasch model and suitable for ranking composite firm financial performance in each industry during the sample years. Ratio difficulty rankings are obtained, along with firm rankings reflecting managers' ability to achieve broad‐based financial success.

For the Foods and Aerospace/Defense industries during 2002‐2011, above average performance was most difficult to achieve in the areas of liquidity, financial leverage, and market valuation. Above average profitability and returns on investment seem to have been easier performance targets during this sample period. The authors also list the ticker symbols of firms with managers who consistently achieved top overall financial performance.

The performance data for each industry and time period have to fit the requirements of the Rasch model. In addition, it must be possible to translate continuous metric readings into binary measures without losing relevant information. Future research might explore the use of more sophisticated Rasch models, measures of non‐financial firm performance dimensions, additional industries and time periods.

This research offers managers, investors and regulators a fresh perspective on the evaluation of firm financial performance and managerial ability.

Rasch models are widely used in the human sciences. Application of this methodology to firms offers a more comprehensive view of firm performance and may reveal factors relevant to firm valuation that have previously been ignored, thus possibly impacting the allocation of capital across firms and industries.

To the authors' knowledge, this research represents a first attempt to apply the Rasch approach to an evaluation of managerial ability as reflected in a firm's overall financial performance.