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A Review Of The Economic Value Added Literature And Application

Author

Listed:
  • Sabol, Andrija

    (Faculty of Economics and Business Zagreb)

  • Sverer, Filip

    (Zagrebacka banka, Zagreb)

Abstract

The purpose of the paper is to present a cornucopia of approaches and ways of defining, measuring and using the concept of Economic Value Added (EVA). EVA is a financial performance measure that emphasizes the maximization of shareholder value, as opposed to mere maximization of net profit. The authors familiarize the readers with important ideas and research that have contributed to the development of the concept of EVA. The nature of this paper is exclusive to the review of secondary sources, such as theoretical insights as well as the results of numerous empirical research of EVA. Furthermore, the paper will show various adjustments to financial statements before accounting profits can be used to calculate EVA. The results of the aforementioned research will unequivocally present EVA as one of the most widely used and accepted measures of overall firm performance, gaining more popularity when coupled with the notions of strategic (financial) management. The paper concludes by determining the role and place of the concept of EVA in the process of value and performance management, as well as strategic management.

Suggested Citation

  • Sabol, Andrija & Sverer, Filip, 2017. "A Review Of The Economic Value Added Literature And Application," UTMS Journal of Economics, University of Tourism and Management, Skopje, Macedonia, vol. 8(1), pages 19-27.
    • Handle: RePEc:ris:utmsje:0195
    as

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    File URL: http://utmsjoe.mk/files/Vol.%208%20No.%201/UTMSJOE-2017-0801-03-Sabol-Sverer.pdf
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    References listed on IDEAS

    as
    1. Scott L. Newbert, 2008. "Value, rareness, competitive advantage, and performance: a conceptual‐level empirical investigation of the resource‐based view of the firm," Strategic Management Journal, Wiley Blackwell, vol. 29(7), pages 745-768, July.
    2. Cynthia A. Montgomery & Birger Wernerfelt, 1988. "Diversification, Ricardian Rents, and Tobin's q," RAND Journal of Economics, The RAND Corporation, vol. 19(4), pages 623-632, Winter.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Alessio Faccia & Francesco Manni & Fabian Capitanio, 2021. "Mandatory ESG Reporting and XBRL Taxonomies Combination: ESG Ratings and Income Statement, a Sustainable Value-Added Disclosure," Sustainability, MDPI, vol. 13(16), pages 1-17, August.
    2. Christopher Robinson & Scott Cloutier & Hallie Eakin, 2017. "Examining the Business Case and Models for Sustainable Multifunctional Edible Landscaping Enterprises in the Phoenix Metro Area," Sustainability, MDPI, vol. 9(12), pages 1-28, December.
    3. Teodora Maria SUCIU, 2022. "Modern Model For Analysis Of Performance In Romanian Clothing Industry Based On Economic Value Added," Contemporary Economy Journal, Constantin Brancoveanu University, vol. 7(2), pages 17-26.
    4. Roristua Pandiangan & Etty Murwaningsari, 2020. "Effect of Investment Decision and Tax Management on Stock Liquidity," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 9(3), pages 64-77, July.
    5. Kateřina Jančíková & František Milichovský, 2019. "HR Marketing as a Supporting Tool of New Managerial Staff in Industry 4.0," Administrative Sciences, MDPI, vol. 9(3), pages 1-12, August.
    6. Dana Dluhosova & Karolina Lisztwanova & Antonín Poncik & Iveta Ratmanová & Zdenek Zmeskal, 2022. "Dynamic and Static Decomposition Analysis of the Czech Automotive Production Sector," European Research Studies Journal, European Research Studies Journal, vol. 0(3), pages 84-95.
    7. Askoldas Podviezko & Ralph Kurschus & Giedre Lapinskiene, 2019. "Eliciting Weights of Significance of Criteria for a Monitoring Model of Performance of SMEs for Successful Insolvency Administrator’s Intervention," Sustainability, MDPI, vol. 11(20), pages 1-16, October.
    8. Juan David González-Ruiz & Maria Isabel Acosta-García & Ramón Villa-García, 2021. "Financial Behaviour in a Mandatory Conversion Process: Empirical Evidence from Colombia," Global Business Review, International Management Institute, vol. 22(1), pages 69-84, February.
    9. Robert Zenzerović & Manuel Benazić, 2024. "The Impact of Selected Financial Ratios on Economic Value Added: Evidence from Croatia," JRFM, MDPI, vol. 17(8), pages 1-9, August.

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    More about this item

    Keywords

    performance measures; strategic management; cost of capital;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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