Applied Financial Economics Letters, Vol. 2, No. 3, pp. 151-154, May 2006
8 Pages Posted: 26 Jul 2009
Date Written: 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.
Keywords: excess profit (residual income), EVA, SVA, performance measurement
JEL Classification: M41, G11, G12, G31
Suggested Citation: Suggested Citation
Ghiselli Ricci, Roberto and Magni, Carlo Alberto, Economic Value Added and Systemic Value Added: Symmetry, Additive Coherence and Differences in Performance (May 2006). Applied Financial Economics Letters, Vol. 2, No. 3, pp. 151-154, May 2006. Available at SSRN: https://ssrn.com/abstract=1439008