Scritti in memoria di Gianfranco Zanda, Capitolo 26: In memoria del R.O.E. (Return on Equity): situazioni “eccentriche” e bias cognitivi nell’utilizzo del R.O.T.E. (Return on Tangible Equity)

[Machine translation] The scientific thought of Master Gianfranco Zanda has evolved along different lines. Fundamental, in the opinion of the writer, appear to be those relating to financial statements and the valuation of business economic capital (and related value creation - E.V.A. 1). In this context, studies related to economics are important first, where, according to the Master, “economic balance is the ability of business management to generate a revenue stream that covers all costs (compensation for factors in a contractual position) and that allows the factor in a residual position (usually, equity) to be remunerated accordingly”. This contribution aims to highlight eccentricities and cognitive biases that are generated, in the analysis of the profitability performance of companies and value creation (rectius of economy), using indicators such as R.O.T.E. (Return On Tangible Equity) to replace R.O.E. (Return On Equity). The R.O.T.E. in question, with marked reference to the Italian banking sector, appears widespread in the “studies and analyses” of market operators and in the accountability of companies for the analysis of value creation and profitability. This paper is based on the motivations behind the use of these indicators in economic analysis, following the evolution that has taken place over this century in the accounting principles of reference for the preparation of financial statements summary statements, with the transition from IAS 22 to IFRS 3 in the accounting representation of merger/acquisition transactions. It also demonstrates how the use of the R.O.T.E. parameter in question for evaluations of comparative economic convenience can lead to real cognitive biases and eccentric and counterintuitive situations.