Economic Value Added - a General Perspective
Decision, Volume 27, No.2, July-Dec 2000, Pg25-55
28 Pages Posted: 13 May 2004 Last revised: 3 Jun 2012
Date Written: June 2, 2000
This paper explains the concept of Economic Value Added (EVA) that is gaining popularity in India. The paper examines whether EVA is a superior performance measure both for corporate reporting and for internal governance. It relied on empirical studies in U.S.A. and other advance economies. It concluded that though EVA does not provide additional information to investors, it can be adapted as a corporate philosophy for motivating and educating employees to differentiate between value creating and value destructing activities. This would lead to direct all efforts in creating shareholder value. The paper brings to attention the dangerous trend of reporting EVA casually that might mislead investors.
Keywords: EVA, Economic Value Added, finance, performance
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