Economic value added and systemic value added: symmetry, aditive coherence and differences in performance

Roberto Ghiselli Ricci and Carlo Alberto Magni

No 5736, Proyecciones Financieras y Valoración from Master Consultores

Abstract: Two measures of excess profit (residual income) are currently available in the literature: the standard one, of which Economic Value Added (EVA) (Stewart, 1991) is a major instantiation, and Systemic Value Added (SVA) (Magni, 2003, 2004, 2005), also named lost-capital residual income (Magni, 2009a,b). This paper shows that, unlike EVA, SVA is symmetric and additively coherent. Also, EVA and SVA are not simply different in value but also convey different information about good or bad performances.

Keywords: Excess profit (residual income); EVA; SVA; performance measurement (search for similar items in EconPapers)
JEL-codes: G11 G12 G31 M41 (search for similar items in EconPapers)
Pages: 8
Date: 2009-07-29
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Persistent link: https://EconPapers.repec.org/RePEc:col:000463:005736

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