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Economic Value Added --- A General Perspective

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Author Info

  • Asish K. Bhattacharya

    (Indian Institute of Management Calcutta)

  • B.V. Phani

    (Indian Institute of Management Calcutta)

Abstract

This paper explains the concept of Economic Value Added (EVA) that is gaining popularity in India. The paper examines whether EVA is a superior performance measure both for corporate reporting and for internal governance. It relied on empirical studies in U.S.A. and other advance economies. It concluded that though EVA does not provide additional information to investors, it can be adapted as a corporate philosophy for motivating and educating employees to differentiate between value creating and value destructing activities. This would lead to direct all efforts in creating shareholder value. The paper brings to attention the dangerous trend of reporting EVA casually that might mislead investors.

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File URL: http://128.118.178.162/eps/fin/papers/0504/0504003.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Finance with number 0504003.

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Length: 28 pages
Date of creation: 02 Apr 2005
Date of revision:
Handle: RePEc:wpa:wuwpfi:0504003

Note: Type of Document - pdf; pages: 28. PDF, ~200KB, 28 pages
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Web page: http://128.118.178.162

Related research

Keywords: Economic Value Added; Corporate Performace;

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  1. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
  2. Jensen, Michael C. & Ruback, Richard S., 1983. "The market for corporate control : The scientific evidence," Journal of Financial Economics, Elsevier, vol. 11(1-4), pages 5-50, April.
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Cited by:
  1. Anca Munteanu & Petre Brezeanu, 2012. "Between Parcimony and Complexity: Comparing Performance Measures for Romanian Banking Institutions," Annals of the University of Petrosani, Economics, University of Petrosani, Romania, vol. 12(1), pages 225-232.

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