A single link to the first track to allow the export script to build the search page
  • 2012 Fall: Volume 10, Issue 2
  • Impact of EVA Adoption on Long-Term Shareholder Value: An Empirical Investigation

    • WaQar I. Ghani ;
    • Samuel H. Szewczyk


    Impact of EVA Adoption on Long-Term Shareholder Value: An Empirical Investigation


    WaQar I. Ghani
    Samuel H. Szewczyk

    Publication Date:


    Journal Title:

    The Journal of Finance Issues

    Volume Number:


    Issue Number:



    Our study examines Economic Value Added metric’s link to long term shareholder value creation. We assume that EVA adoption directs a positive change in managerial behavior that in turn affects long-term value generation. Unlike most prior research that uses only one sample, we employ two samples. The first sample is based on 57 U.S. firms that Stern Stewart & Company has posted on its website. They report that these firms have achieved superior financial performance as a consequence of the adoption of EVA for the 1994-98 periods. The second sample is based on 178 U.S. firms’ proxy statements for the 1994-1999 periods in which these firms have described EVA use as a part of their performance evaluation and compensation metric. Our study’s results, using both long-term abnormal holding period returns and analyst forecast based on five-year growth of earnings per share show that EVA adoption has no significant impact on a firm’s long-run performance when compared to a control sample matched on industry, size and past performance. Moreover, we find no evidence that EVA adoption induces greater shortsightedness as EVA adopters do not underperform, on average, the non- EVA firms.

    First Page:


    Last Page:


    Total Pages: