Does EVA really improve a firm’s performance?
|dc.identifier.citation||Curry, R. (1999). Does EVA really improve a firm’s performance? (Thesis). Retrieved from http://hdl.handle.net/10523/1442||en|
|dc.description.abstract||In the last decade one performance metric has been revered as the most successful in measuring value creation and aligning managers interests with those of the company's shareholders. This metric is known as economic value added (EVA), and was made popular by Joel Stern and G Bennett Stewart III in the 1980's. Many anecdotes relating to the achievements in performance by companies that have adopted this measure have been documented in the literature. Claims such as EVA being the "true mover of stock prices" and thus having an almost perfect correlation with share price are made. Furthermore, a proposition has been made that following the implementation of EVA significant improvements become evident in the performance of the company 2 . This impresses on a reader the notion that introducing EVA will inexorably have positive ramifications for a company. Despite the barrage of claims, a deficiency of empirical evidence substantiating these claims exists. There appears to be a crucial need for research in this area, in order to determine the validity of such claims: whether it is in fact a superior performance measure to more traditional measures such as EPS, ROE, RONA and more specifically, does it veritably correlate with an observable significant improvement in a company's performance. This study aims to investigate the truth behind the claims that the introduction of EVA improves a company's performance. Two comparisons are made of the performance of companies that have adopted Stem Stewart's EVA programme: the first is a comparison between EVA companies and matched non-EVA companies in the two year period following the completion of the EVA integration. The second comparison focuses on EVA companies, investigating whether the performance following the introduction of EVA has improved comparatively to the period preceding its introduction. A further investigation is made relating to whether one form of EVA has more impact on a company's performance than another.||en_NZ|
|dc.subject||economic value added||en_NZ|
|dc.subject.lcsh||H Social Sciences (General)||en_NZ|
|dc.title||Does EVA really improve a firm’s performance?||en_NZ|
|thesis.degree.grantor||University of Otago||en_NZ|
|otago.school.eprints||Finance & Quantitative Analysis||en_NZ|
|dc.description.references||Adler, Ralph and Lawrence McLelland "EVA: Re-inventing the Wheel" Chartered Accountants Journal May 1995 p 35-39 Anonymous "Looking for Fast Payoffs" Business Week January 13, 1997 p 52 Anonymous "Calculating EVA" Industry Week April 7, 1997 v 246(7) p 102-106 Bacidore, Jeffrey M, John A Boquist, Todd T Milbourn and Anjan V Thakor " The Search for Best Financial Performance Measure" Financial Analysts Journal May/June 1997 p 11-20 Bao, Ben-Hsien and Da-Hsien Bao "Usefulness of Value Added and Abnormal Economic Earnings: An Empirical Examination" Journal of Business Finance and Accounting v 25(1) & (2), January/March 1998 p 253-265 Barber, Brad M and John D Lyon "Detecting Abnormal Operating Performance: The Empirical Power and Specification of Test Statistics" Journal of Financial Economics v 41 1996 p 359-399 Barfield, Richard "Nearly New" Accountancy – International Edition January 1998 p 41 Best, Peter "Economic Value Added" Chartered Accountants Journal February 1995 p 37 Biddle, Gary C, Robert M Bowen and James S Wallace "Does EVA® Beat Earnings? Evidence on Associations with Returns and Firm Values" Journal of Accounting and Economics 1997 v 24 p 301-336 Birchard, Bill "Mastering the New Metrics" CFO October 1994, v 10(10) p 30 –36 Blair, Alistair "EVA Fever" Management Today January 1997 p 42-45 Booth, Rupert "Economic Value Added as a Management Incentive" Management Accounting October 1997 v 75(9) p 48-50 Chen, Shimin and James L Dodd "Economic Value Added (EVATM ): An Empirical Examination Of A New Corporate Perfoimance Measure" Journal of Managerial Issues v 9(3) p 318-333 Chamberlain, Kevin and Ross Campbell "Creating Shareholder Value" New Zealand Manufacturer Nov 1995 p 15- 17 Christina, DeAnn ' "All About EVA" CFO November 1996 p 13 Crowther, D, M L Davies and S M Cooper "Evaluating Corporate Performance: A Critique of Economic Value Added" Dierks, Paul A and Ajay Patel "What is EVA and how can it help your Company?" Management Accounting November 1997 v 79(5) p 52-58 Drysdale, Louise "Lawless in Chicago" Management Accounting October 1996 v 74(9) p 56-59 Foster, G., "Financial Statement Analysis", Prentice Hall International Inc., New Jersey, (1986). Freedman, Julian "New Research Red Flags EVA for Stock Picks" Management Accounting January 1998 p 62-63 Freedman, William "Flow do you add up? Measuring Performance Metrics" Chemical Week Oct 9 1996 v 158(38) p 31-36 Han-is, Roy "A Study in Sniping" CFO October 1996 p 44 Holthausen, Robert W and David F Larcker "The Financial Performance of Reverse Leveraged Buyouts" Journal of Financial Economics v42 1996 p293-332 Jain, Bharat A and Omesh Kini "The Post-Issue Operating Performance of IPO Firms" The Journal of Finance v 49(5) December 1994 p 1699-1726 Kay, Helen "Capital City" Director October 1994 p 34-40 Kroll, Karen M "EVA and Creating Value" Industry Week April 7, 1997 v 246(7) p 102-109 Lehn, Kenneth and Anil K Makhija "EVA and MVA as Performance Measures and Signals for Strategic Change" Strategy and Leadership Magazine June 1996 p 34-38 Martin, Justin "Eli Lilly is Making Shareholders Rich, How? By Linking Pay to EVA." Fortune September 1996, p15-16 McConville, Daniel J "All About EVA" Industry Week April 18, 1994 p 55-58 McDonald, Danielle, and Abbie Smith "A Proven Connection: Performance Management and Business Results" Compensation and Benefits Review January- February 1995 p 59-64 Mikkelson, Wayne H, M Megan Parch and Kshitij Shah "Ownership and Operating Performance of Companies that go Public" Financial Economics v44 1997 p 281-307 Myers, Randy "Metric Wars" CFO October 1996 p 41-50 Null, David and Daniel Cenatempo "Paper Company Strategies should Focus on Building Economic Value" Pulp and Paper September 1997 v 71(9) p 59-67 Perkins, John and Andre van Zyl "Economic Value Added -- Meeting Managements Mission" Accountants' Journal February 1994 p 41-42 Phillips, Richard "Will we Ever Find the Financial Holy Grail?" Independent January 26, 1997 Riley, Michael "The Mail Man Cometh" Financial Executive" May/June 1998 v 14(3) p 28-32 Siegel, Sidney "Nonparametric Statistics for the Behavioural Sciences" McGraw-Hill Book Company 1956 Spero, Lee "Getting EVA Right" TMA Journal November/December 1997 v 17(6) p19-22 Spinner, Karen "Signed and Sealed – But Can EVA Deliver?" CFO Magazine November 1995 Stem, Joel "EVA Share Options that Maximise Value" Corporate Finance August 1993 p 31-32 Stem, Joel "No Incentive for Bad Management" Corporate Finance March 1994 v 112 p 43-47 Stewart, G Bennett III "EVA Works – But not if you make these Common Mistakes" Fortune May 1, 1995 v 131(8) p 85-86 Topkis, Maggie "A New Way to Find Bargains" Fortune December 9, 1996 p 265 Tully, Shawn "The Real Key to Creating Wealth" Fortune September 20, 1993 p12-21 Tully, Shawn "America's Best Wealth Creators " Fortune November 28, 1994 v 130(11) p 143 -145 Wallace, James S"Adopting Residual Income-Based Compensation PlansDo You Get What You Pay For?" Journal of Accounting and Economics 1997 v 24 p 275-300||en_NZ|
Files in this item
There are no files associated with this item.
This item is not available in full-text via OUR Archive.
If you would like to read this item, please apply for an inter-library loan from the University of Otago via your local library.
If you are the author of this item, please contact us if you wish to discuss making the full text publicly available.