Advanced Search
MyIDEAS: Login to save this paper or follow this series

Systemic Value Added, Residual Income and Decomposition of a Cash Flow Stream

Contents:

Author Info

  • Magni, Carlo Alberto

Abstract

The problem of decomposing a cash flow has been treated in recent years by Gronchi (1986, 1987), Peccati (1987, 1991, 1992), Stewart (1991), Pressacco and Stucchi (1997). After showing that the Economic Value Added introduced by Stewart bears a strong resemblance to (and in some conditions coincides with) the periodic Net Present (or Final) Value in Peccati's model and that Pressacco-Stucchi's model can be seen as a formal generalization of Stewart's model, this paper proposes a different decomposition model introducing the Systemic Value Added, which lends itself to a disaggregation in periodic shares whose uncompounded sum coincides with Peccati's and Pressacco-Stucchi's Net Final Value. The model proposed offers the opportunity to dwell on the notion of residual income, showing that the interpretation given by the three previous models fails to explain the correct evolution of the investor's financial system. The evaluation process is then reshaped by introducing the concept of shadow project, by means of which Peccati's and Stewart's model can be retrieved. Pressacco-Stucchi's model can also be retrieved and generalized and some of its assumptions are relaxed. The formal results in the last section provide sufficient and necessary conditions for integrating all models in the systemic framework here adopted. Finally, some hints shows that the results Pressacco and Stucchi obtain can be proved by using the systemic approach here suggested.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://mpra.ub.uni-muenchen.de/5900/
File Function: original version
Download Restriction: no

Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 5900.

as in new window
Length:
Date of creation: Jul 2000
Date of revision:
Handle: RePEc:pra:mprapa:5900

Contact details of provider:
Postal: Schackstr. 4, D-80539 Munich, Germany
Phone: +49-(0)89-2180-2219
Fax: +49-(0)89-2180-3900
Web page: http://mpra.ub.uni-muenchen.de
More information through EDIRC

Related research

Keywords: Residual income; cash flow; Net Final Value; Systemic Value Added;

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Gronchi, Sandro, 1986. "On Investment Criteria Based on the Internal Rate of Return," Oxford Economic Papers, Oxford University Press, Oxford University Press, vol. 38(1), pages 174-80, March.
  2. Magni, Carlo Alberto, 2000. "Scomposizione di sovraprofitti: Economic Value Added e Valore Aggiunto Sistemico
    [Excess-profit decomposition: Economic Value Added and Systemic Value Added]
    ," MPRA Paper, University Library of Munich, Germany 8935, University Library of Munich, Germany.
  3. Magni, Carlo Alberto, 2000. "Decomposition of a Certain Cash Flow Stream: Differential Systemic Value and Net Final Value," MPRA Paper, University Library of Munich, Germany 7308, University Library of Munich, Germany.
Full references (including those not matched with items on IDEAS)

Citations

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

Cited by:
  1. Magni, Carlo Alberto, 2007. "A Sum&Discount method for appraising firms:An illustrative example," MPRA Paper, University Library of Munich, Germany 6114, University Library of Munich, Germany.
  2. Magni, Carlo Alberto, 2001. "Valore Aggiunto Sistemico: un'alternativa all'EVA quale indice di sovraprofitto periodale," MPRA Paper, University Library of Munich, Germany 7525, University Library of Munich, Germany.
  3. Magni, Carlo Alberto, 2007. "Residual income and value creation: An investigation into the lost-capital paradigm," MPRA Paper, University Library of Munich, Germany 7335, University Library of Munich, Germany.
  4. Magni, Carlo Alberto, 2007. "Measuring performance and valuing firms: In search of the lost capital," MPRA Paper, University Library of Munich, Germany 5850, University Library of Munich, Germany.
  5. Magni, Carlo Alberto, 2003. "Opportunity cost, excess profit, and counterfactual conditionals," MPRA Paper, University Library of Munich, Germany 5695, University Library of Munich, Germany.
  6. Carlo Alberto, Magni, 2008. "Splitting Up Value: A Critical Review of Residual Income Theories," MPRA Paper, University Library of Munich, Germany 10506, University Library of Munich, Germany.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:5900. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).

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.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with 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 profile, as there may be some citations waiting for confirmation.

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