The True Value of Eva

5 Pages Posted: 22 Feb 2005

See all articles by John M. Griffith

John M. Griffith

Old Dominion University - Strome College of Business

Abstract

Stern Stewart & Company (SSC) developed the measure, Economic Value Added (EVA), to reward employees for maximizing shareholder wealth. Financial analysts also use EVA to measure firm performance. This study assesses the performance of companies that have implemented the EVA-based compensation system, and questions whether analysts should use EVA performance to forecast stock performance. Investors in EVA adopters or in firms for which EVA has been used to forecast stock performance would have suffered significant losses.

Suggested Citation

Griffith, John M., The True Value of Eva. Journal of Applied Finance, Vol. 14, No. 2, Fall/Winter 2004. Available at SSRN: https://ssrn.com/abstract=670387

John M. Griffith (Contact Author)

Old Dominion University - Strome College of Business ( email )

Finance Discipline
Norfolk, VA 23529
United States

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