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Eva In The E&P Industry: The Case Of Nuevo Energy

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  • John McCormack
  • Ian Drummond Gow

Abstract

This article presents a case study illustrating some aspects of the new business model discussed in the roundtable above. Continuing a major theme in the roundtable, the authors begin by arguing that the long-run failure of the E&P industry to create shareholder wealth stems to a large degree from weak or distorted incentives held out to the top executives and managers of most large, publicly traded companies. This article traces the incentive problem to the lack of an effective wealth creation metric to guide the financial management process. Although the industry employs a variety of accounting-based performance measures, none is a reliable measure of wealth creation. 2001 Morgan Stanley.

Suggested Citation

  • John McCormack & Ian Drummond Gow, 2001. "Eva In The E&P Industry: The Case Of Nuevo Energy," Journal of Applied Corporate Finance, Morgan Stanley, vol. 13(4), pages 76-86.
  • Handle: RePEc:bla:jacrfn:v:13:y:2001:i:4:p:76-86
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