Economic Value Added --- A General Perspective

Asish K. Bhattacharya and B.V. Phani
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Asish K. Bhattacharya: Indian Institute of Management Calcutta
B.V. Phani: Indian Institute of Management Calcutta

Finance from EconWPA

Abstract: 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: Economic Value Added; Corporate Performace (search for similar items in EconPapers)
JEL-codes: G30 (search for similar items in EconPapers)
Date: 2005-04-02
Note: Type of Document - pdf; pages: 28. PDF, ~200KB, 28 pages
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpfi:0504003

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