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The Development Of Corporate Performance Measures: Benchmarks Before EVA


  • Stanley Garstka
  • William Goetzmann


Modern accounting-based valuation models such as residual income and EVA may be thought of as careful estimates of the economic return to investors in excess of the firm's cost of capital. The framework for these models can be traced to theoretical and empirical work in the early part of the century, coincidental with the introduction of mathematical economics to America and with the availability of standardized accounting data for use by professional statisticians. By the middle of the century these "economic theory" and "practical empirical" tracks began to merge and corporate managers consciously adapted and applied performance evaluation technology in the decision making process. The development of corporate performance measurement over the past century has its genesis in the work of statisticians, economists and managers who sought to understand the functions of the American corporation and through this understanding to improve its operation. In this essay, we trace the development of early attempts by academics to compare economic performance across firms using empirical data. We also list significant developments in economic theory that are relevant to the performa

Suggested Citation

  • Stanley Garstka & William Goetzmann, 1999. "The Development Of Corporate Performance Measures: Benchmarks Before EVA," Yale School of Management Working Papers ysm121, Yale School of Management, revised 01 Jan 2001.
  • Handle: RePEc:ysm:somwrk:ysm121

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    References listed on IDEAS

    1. Lim, S.S. & Sunder, S., 1990. "Accuracy Of Linear Valuation Rules In Industry Segmented Environments: Industry Vs. Economy-Weighted Indexes," GSIA Working Papers 89-90-05, Carnegie Mellon University, Tepper School of Business.
    2. Lim, S.S. & Sunder, S., 1990. "Econometric Efficiency Of Asset Valuation Rules Under Price Movement And Measurement Errors," GSIA Working Papers 89-90-40, Carnegie Mellon University, Tepper School of Business.
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    Cited by:

    1. Roberto Ghiselli Ricci & Carlo Alberto Magni, 2014. "Axiomatization of residual income and generation of financial securities," Quantitative Finance, Taylor & Francis Journals, vol. 14(7), pages 1257-1271, July.
    2. Céline Chatelin & Stéphane Trebucq, 2002. "Du processus d'élaboration du cadre conceptuel en gouvernance d'entreprise A development process Of a conceptual framework of corporate governance," Working Papers CREGO 1021201, Université de Bourgogne - CREGO EA7317 Centre de recherches en gestion des organisations.

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