Intertemporal Cost Allocation and Managerial Investment Incentives: A Theory Explaining the Use of Economic Value Added as a Performance Measure

1997 ◽  
Vol 105 (4) ◽  
pp. 770-795 ◽  
Author(s):  
William P. Rogerson
Keyword(s):  
Cost Allocation ◽  
Economic Value ◽  
Value Added ◽  
Performance Measure ◽  
Investment Incentives ◽  
Economic Value Added ◽  
A Performance

scholarly journals Analisis Kinerja Keuangan Perusahaan dengan Metode Economic Value Added (EVA) (Studi Kasus Perusahaan Otomotif Go Publik)

2016 ◽  
Vol 1 (2) ◽  
pp. 106
Author(s):  
Rahman Mubarok ◽  
Farida Ratna Dewi
Keyword(s):  
Capital Structure ◽  
Stock Price ◽  
Cost Of Capital ◽  
Corporate Performance ◽  
Economic Value ◽  
Value Added ◽  
Economic Value Added ◽  
Stock Indexes ◽  
Global Economics ◽  
A Performance

<p><em>Global economics crisis causes the fall of world stock. This is causes weakens it share in BEI, including sector otomotif.  BEI has some stock indexes as movement indicator of stock price, one of them is index Kompas 100.  This Index represents of  about 70-80 percent market capitalization value total of share  in BEI.  However, that can be different with other index, so that be necessary to measure of each corporate performance with using Economic Value Added (EVA) method.    EVA is used to measure of corporate performance based of the value.  value added will be create, if the retained earning more than cost of capital.  From two company analized during the 2007 to 2008 period,  there is only one of corporate have a performance increase at 2008, that is PT Multistrada Arah Sarana Tbk, this is mean the corporate has been investor expectation filled.  Differ from PT Multistrada, PT Gajah Tunggal at 2008 have a performance decrease. At 2007 it have positive value of EVA, but at 2008 value of EVA get down to negative. This is happen cause of dead loss in consequence of global economics crisis. For the companies that give the negative value, it  better find out more strategies so it  can make their profit rise and also to push the capital cost with choosing the lowest capital structure. Beside that, the companies also should erase the activities that can caused the value of the company becoming less.</em><strong></strong></p>

scholarly journals Economic value added: A financial flexibility tool

2014 ◽  
Vol 12 (1) ◽  
pp. 703-708 ◽  
Author(s):  
Reeta Shah ◽  
Arunima Haldar ◽  
S.V.D. Nageswara Rao
Keyword(s):  
Financial Performance ◽  
Shareholder Value ◽  
Economic Value ◽  
Value Added ◽  
Performance Measure ◽  
Corporate Financial Performance ◽  
Economic Value Added ◽  
Financial Flexibility ◽  
The Right ◽  
The Impact

With increased emphasis on shareholder value addition, there has been an ongoing debate on choosing the right measure of corporate financial performance. There is need for a single measure of financial performance that not only measures corporate financial performance but also works as a financial flexibility tool. The financial performance measure employed by the firm measures the value generated by the firm. This necessitates the firms to choose the right performance tool which can reflect the accurate value added by the firm. We study the role and implications of Economic Value Added as a financial performance measure and further discuss its applicability as a tool for introducing financial flexibility. Flexibility is assessed by measuring the impact of organization’s competitiveness and performance. The findings reveal that EVA as a tool enables the corporate to differentiate between value-creating and value-destructing activities and helps managers in taking right decisions which enhances shareholder value. Thus, finally the research makes a case for managers to use EVA as a tool to provide additional information to investors. Interestingly, EVA can also be adapted as a corporate philosophy for motivating and educating employees

scholarly journals The information content of economic value added, residual income, earnings and operating cash flow: evidence from South African industrial shares

2010 ◽  
Vol 7 (3) ◽  
pp. 454-464 ◽  
Author(s):  
Pierre Erasmus
Keyword(s):  
Information Content ◽  
Cash Flow ◽  
Economic Value ◽  
Value Added ◽  
Performance Measure ◽  
Residual Income ◽  
Economic Value Added ◽  
Significant Information ◽  
Operating Cash Flow ◽  
Level Of Significance

Proponents of the value based financial performance measure of Economic Value Added (EVA) argue that it is a major improvement over other traditional measures. This study investigates the relationship between EVA and market-adjusted share returns, and compares it to that of residual income, earnings and operating cash flow. Relative information content tests suggest that earnings have the strongest relationship with share returns. The results from the incremental information content tests indicate that although the EVA components provide statistically significant information content beyond that provided by residual income, the level of significance is low.

scholarly journals Economic value added (eva) as a performance measurement for glcs vs non-glcs: evidence from bursa malaysia

2008 ◽  
Vol 17 (2) ◽  
pp. 168-179 ◽  
Author(s):  
Ismail Issham ◽  
Abdul Samad M Fazilah ◽  
Yen Siew Hwa ◽  
Anton Abdulbasah Kamil ◽  
Azli Azli Ayub ◽  
...  
Keyword(s):  
Performance Measurement ◽  
Economic Value ◽  
Value Added ◽  
Economic Value Added ◽  
A Performance

scholarly journals Economic value added: Corporate performance measurement tool

2016 ◽  
Vol 11 (1) ◽  
pp. 47-58 ◽  
Author(s):  
Reeta Shah ◽  
Arunima Haldar ◽  
S.V.D. Nageswara Rao
Keyword(s):  
Performance Measurement ◽  
Economic Value ◽  
Value Added ◽  
Performance Measure ◽  
Measurement Tool ◽  
Economic Value Added ◽  
Total Process ◽  
Potential Benefits ◽  
Traditional Performance ◽  
Selection Of

Performance measurement matters in today’s complex business arena irrespective of the type, nature, and volume diversity in business. If the result of the performance measurement goes wrong due to the faulty or inaccurate selection of tool(s), then the total process will prove wrong in due time hence an attempt to evaluate Economic Value Added (EVA) as an alternative to traditional performance measure. Generally, it is believed that EVA is truly designed for large companies and is the best performance measure. The possible advantages, opportunities and limitations of using EVA as a performance measurement tool is discussed that may encourage the users/readers to incorporate EVA with their current setup to reap the potential benefits from it.

scholarly journals An Examination Of The Consistency Of Risk Differentials Between Historical Measures Of Risk And The Risk Implied By Economic Value Added

2011 ◽  
Vol 3 (12) ◽  
Author(s):  
Wes Jones ◽  
George Lowry Randolph
Keyword(s):  
Inventory Management ◽  
Common Ground ◽  
Trade Credit ◽  
Effective Means ◽  
Economic Value ◽  
Value Added ◽  
Performance Measure ◽  
Managerial Compensation ◽  
Economic Value Added ◽  
Basic Premise

The corporate world is continually striving to identify an effective means of evaluating management performance.  Corporate concern over this issue stems from both the perspective of managerial compensation and maximizing shareholder value.  Some companies have used such measures as returns on assets, equity, or investment.  Some have relied on other measures like inventory management, trade credit management, or cash management.  The common ground shared by these measures is that they rely on accounting measures of firm activity.  The weakness of using such means to measure firm performance is that they are driven by a rule-based system, and anyone with sufficient understanding of the rules can manipulate the information to present the picture of the firm’s performance in a way that may not track with the reality of the firm’s performance.  This does not suggest that managers will engage in such numerical fiddle-dee-dee; rather, it suggests that the opportunity to do so exists, and must somehow be incorporated into the shareholder’s interpretation of the reported performance.  This situation leaves firms in the position of needing a better performance measure by which to evaluate the work of its management.  One alternative performance measure offered to meet this need was introduced in the early 1980's by Stern Stewart and Company and is known as Economic Value Added or EVA®.(Ehrbar, 1998)  The basic premise underlying EVA is an effort to encourage managers and other employees to think and act as entrepreneurs rather than employees.

scholarly journals The impact of economic value added (EVA) and return on assets on created shareholder value of Vietnamese firms

2020 ◽  
Vol 3 (4) ◽  
pp. 402-417
Author(s):  
Tran Thi Thuy Linh
Keyword(s):  
Regression Model ◽  
Financial Performance ◽  
Robust Regression ◽  
Economic Value ◽  
Value Added ◽  
Performance Measure ◽  
Investment Efficiency ◽  
Economic Value Added ◽  
Return On Assets ◽  
The Impact

The financial performance of an enterprise affects the valuation of assets to its shareholders. Maximizing the value of assets for shareholders is an important goal of corporate financial management, so shareholders always expect share value increases to achieve optimal investment efficiency. The objective of the study is to analyze the impact of Economic Value Added (EVA) and Return on Assets (ROA) on Created Shareholders Value (CSV) in Vietnamese listed companies during 2011-2016. Whether EVA measure better than the traditional performance measure like ROA on CSV? The CSV indicator is measured by two models: the Fernandez model (2001) and the Market Value Added (MVA) model. The regression methods were being used are the OLS regression model and the Robust regression model. The research results show that EVA has a positive impact on CSV in most years in the period of 2011-2016. In addition, EVA is more effective than ROA in explaining the changes in CSV in most years during the research period, showing the outstanding advantage of EVA in evaluating CSV over ROA. This study encourages companies to use a combination of different measurement methods to valuate shareholder assets and financial performance.

Pengaruh Pengungkapan Corporate Social Responsibility (CSR) Pada Nilai Perusahaan

2011 ◽  
Vol 3 (2) ◽  
pp. 1-19
Author(s):  
Chermian Eforis ◽  
Rosita Suryaningsih
Keyword(s):  
Corporate Social Responsibility ◽  
Annual Report ◽  
Economic Value ◽  
Value Added ◽  
Market Value ◽  
Economic Value Added ◽  
Market Value Added ◽  
Csr Disclosure ◽  
Corporate Social ◽  
Simple Regression

This study aims to determine the influence of the level of CSR disclosure in annual report to corporate values that proxies with Economic Value Added (EVA) and Market Value Added (MVA).   The objects of this study are companies that were included in Kompas 100 Edition of the second review in 2010.The chosen model of this research is simple regression which can be defined as a model that used the normal probability plot  for data normality test, DurbinWatson test for autocorrelation, graph plots to test heteroscedasticity, and saw the value of tolerance and VIF for multicollinearity test. Hypothesis is analyzed using simple regression method  The results showed that the level of CSR disclosure contained in the annual report has a significant influence on the EVA. The same results were also found on the MVA, where the level of CSR disclosure contained in the annual report has a significant influence on the MVA. Key words: Corporate Social Responsibility, Economic Value Added, Market Value Added

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