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Value Creation and Enhancement: Back to the Future

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  • Aswath Damodaran

Abstract

In recent years, firms have turned to their attention increasingly to ways in which they can increase their value. A number of competing measures, each with claims to being the "best" approach to value creation, have been developed and marketed by investment banking firms and consulting firms. In this paper, we begin with a generic discounted cash flow model, and consider the ways in which value can be created or destroyed in a firm. We then look at two of the most widely used value enhancement measures, Economic Value Added and Cash Flow Return on Investment, and consider where these approaches yield similar

Suggested Citation

  • Aswath Damodaran, 1999. "Value Creation and Enhancement: Back to the Future," New York University, Leonard N. Stern School Finance Department Working Paper Seires 99-018, New York University, Leonard N. Stern School of Business-.
    • Handle: RePEc:fth:nystfi:99-018
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    File URL: http://www.stern.nyu.edu/fin/workpapers/papers99/wpa99018.pdf
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    1. repec:prg:jnlpep:v:preprint:id:653:p:1-16 is not listed on IDEAS
    2. Rodolfo Apreda, 1999. "The Cash Flow Model with Float: A New Approach to Deal with Valuation and Agency Problems," Journal of Applied Economics, Universidad del CEMA, vol. 2, pages 247-279, November.
    3. Rodolfo Apreda, 2002. "The Governance Slack Model. A Cash Flow Approach for the Budgeting and Accountability of some Corporate Governance Issues," CEMA Working Papers: Serie Documentos de Trabajo. 212, Universidad del CEMA.
    4. Neculai Tabara & Andreea Vasiliu, 2013. "Determinants Of Economic Value Added.Empirical Evidence From Romanian Market," EuroEconomica, Danubius University of Galati, issue 1(32), pages 5-15, May.
    5. Raluca-Andreea Trandafir, 2015. "The Economic Value Added (Eva) - A Measurement Indicator Of The Value Creation Within A Company From The Romanian Seaside Hotel Industry," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 1, pages 36-40, January.

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