Economic Value Added and Systemic Value Added: Symmetry, Additive Coherence and Differences in Performance
Roberto Ghiselli Ricci
Università degli Studi di Sassari
Carlo Alberto Magni
University of Modena and Reggio Emilia - Department of Economics
Applied Financial Economics Letters, Vol. 2, No. 3, pp. 151-154, May 2006
Two measures of excess profit (residual income) are currently available in the literature: the standard one, of which Economic Value Added (EVA) (Stewart, 1991) is a major instantiation, and Systemic Value Added (SVA) (Magni, 2003, 2004, 2005), also named lost-capital residual income (Magni, 2009a,b). This paper shows that, unlike EVA, SVA is symmetric and additively coherent. Also, EVA and SVA are not simply different in value but also convey different information about good or bad performances.
Number of Pages in PDF File: 8
Keywords: excess profit (residual income), EVA, SVA, performance measurement
JEL Classification: M41, G11, G12, G31
Date posted: July 26, 2009
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