IDEAS home Printed from https://ideas.repec.org/a/sbr/abstra/v52y2000i1p68-91.html
   My bibliography  Save this article

Good And Bad News For The Implementation Of Shareholder-Value Concepts In Decentralized Organizations - A Critical Study Comparing the DCF Method and the EVA Method

Author

Listed:
  • Thomas Pfeiffer

Abstract

This paper investigates the suitability of different performance measures to evaluate the performance of investment center managers, when intrafirm coordination problems arise between headquarters and divisional management. The performance measures analyzed are based on available accounting information: cash in- and outflows, depreciation and book value. We characterize the entire class of time-variant performance measures that (i) enable the implementation of a given investment level non-trivially and/or (ii) induce goal congruence between both parties for inelastic and elastic investments. The findings show the possibilities and limitations of different performance measures as adequate control instruments. In particular, the findings for two methods often used in everyday business operations – Economic Value Added (EVA) method and Discounted Cash Flow (DCF) method – are discussed in detail.

Suggested Citation

  • Thomas Pfeiffer, 2000. "Good And Bad News For The Implementation Of Shareholder-Value Concepts In Decentralized Organizations - A Critical Study Comparing the DCF Method and the EVA Method," Schmalenbach Business Review (sbr), LMU Munich School of Management, vol. 52(1), pages 68-91, January.
    • Handle: RePEc:sbr:abstra:v:52:y:2000:i:1:p:68-91
    as

    Download full text from publisher

    File URL: http://www.vhb.de/sbr/pdfarchive.html
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Thomas Pfeiffer, 2004. "Net Present Value‐Consistent Investment Criteria Based on Accruals: A Generalisation of the Residual Income‐Identity," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 31(7‐8), pages 905-926, September.
    2. Herbert Hax, 2003. "Thünen‐Vorlesung: Unternehmensführung und ökonomische Rationalität," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 4(3), pages 295-312, August.
    3. Christian Hofmann, 2005. "Gestaltung von Erfolgsrechnungen zur Steuerung langfristiger Projekte," Schmalenbach Journal of Business Research, Springer, vol. 57(8), pages 689-716, December.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sbr:abstra:v:52:y:2000:i:1:p:68-91. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: sbr (email available below). General contact details of provider: https://edirc.repec.org/data/fbmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.