Economic Value-Added: A Review of the Theoretical and Empirical Literature
Asian Review of Accounting, Vol. 9, No. 1, pp. 67-86, 2001
22 Pages Posted: 3 Nov 2012
Date Written: 2001
With increasing pressure on firms to deliver shareholder value, there has been a renewed emphasis on devising measures of corporate financial performance and incentive compensation plans that encourage managers to increase shareholder wealth. One professedly recent innovation in the field of internal and external performance measurement is a trade-marked variant of residual income known as economic value-added (EVA). This paper attempts to provide a synoptic survey of EVA’s conceptual underpinnings and the comparatively few empirical analyses of value-added performance measures. Special attention is given to the GAAPrelated accounting adjustments involved in EVA-type calculations.
Keywords: economic value added, EVA, accounting performance measures
JEL Classification: M40
Suggested Citation: Suggested Citation