CORPORATE GOVERNANCE, EVA, AND SHAREHOLDER VALUE

Joel Stern

Journal of Applied Corporate Finance, 2004, vol. 16, issue 2‐3, 91-99

Abstract: Together with corporate governance expert Stuart Gillan, the managing partner of Stern Stewart discusses important issues of corporate financial management, including the fundamental objective of the public corporation and how boards of directors can achieve it. Whereas financial economists have long argued that the corporate goal is the maximization of firm value, Stern advocates a variation of the concept known as “Market Value Added”–one that is designed to discourage corporate growth and capital raising that does not end up adding value for shareholders. To accomplish this goal, he emphasizes the importance of incentive compensation systems tied not to accounting earnings, but to a measure of economic profit like EVA. And, as Stern argues in closing, EVA‐based incentive systems are likely to be effective not only in the private sector, but in increasing the efficiency and value of state‐owned enterprises. Indeed, such systems could bring about a new kind of employee capitalism that ESOPs promised, but have largely failed, to deliver.

Date: 2004
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://doi.org/10.1111/j.1745-6622.2004.tb00541.x

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:jacrfn:v:16:y:2004:i:2-3:p:91-99

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1078-1196

Access Statistics for this article

Journal of Applied Corporate Finance is currently edited by Donald H. Chew Jr.

More articles in Journal of Applied Corporate Finance from Morgan Stanley
Bibliographic data for series maintained by Wiley Content Delivery ().