The True Value of EVA

The True Value of EVA

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...

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Veröffentlicht in:Journal of applied finance : JAF 2004-10, Vol.14 (2), p.25
1. Verfasser: Griffith, John M
Format: Artikel
Sprache:eng
Schlagworte:
Abnormal returns
Compensation
Compensation plans
Earnings per share
Economic value added
Employees
Financial performance
Forecasting techniques
Investments
Stock exchanges
Stock prices
Stockholders
Studies
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Zusammenfassung: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. [PUBLICATION ABSTRACT]
ISSN:1534-6668