| Nonfinancial performance measures (NFPMs) have long been argued to reflect underlying economic resources and activities that are not reflected by financial performance measures (FPMs). Exploratory factor analysis (EFA) results presented in this paper suggest that nineteen objective, publicly-available NFPMs of major airlines indeed do reflect seven underlying constructs that are not reflected by eighteen common FPMs. Estimated values for the seven identified nonfinancial constructs and six identified financial constructs are calculated and shown to be reliable via Cronbach's Alpha. Confirmatory factor analysis (CFA) and the Stewart-Love Canonical Redundancy Index subsequently are applied to a holdout sample to verify the EFA findings.; The economic relevance of the unique information provided by airline NFPMs is assessed in this paper via reference to the equities market. Regression analysis of market prices indicates that passenger volume and customer satisfaction measures provide significant information beyond the information provided by FPMs and are thus market “value-relevant.” Further, measures of airline service quality are concluded to be indirectly related to market prices through their relationship to customer satisfaction. No evidence, however, is found to support the assertion that measures of airline efficiency provide relevant information not already provided by FPMs.; Finally, the uniqueness and value-relevance of multiple NFPMs and FPMs raises the issue of the relative importance of those measures. To date, however, a satisfactory aggregation methodology that properly weights both NFPMs and FPMs has been elusive. This paper fills that void by demonstrating how Saaty's Analytic Hierarchy Process (AHP) can be applied to create a valid composite measure of corporate performance. |
