The EVA Financial Management System
Опубликовано на портале: 21-06-2006
Journal of Applied Corporate Finance.
1995.
Vol. 8.
No. 2.
Тематические разделы:
In this article, we argue that for many large companies the tops-down, earnings per
share-based model of financial management that has long dominated corporate American
is becoming obsolete. The most serious challenge to the long reign of EPS is coming
from a measure of corporate performance called "economic value added," or EVA. EVA
is by no means a new concept. Rather it is a practical, and highly flexible, refinement
of economists' concept of "residual income"--the value that is left over after a
company's stockholders (and all other important stakeholders) have been adequately
compensated. For companies that aim to increase their competitiveness by decentralizing,
EVA is likely to be the most sensible basis for evaluating and rewarding the periodic
performance of empowered line people, especially those entrusted with major capital
spending decisions. EVA, moreover, is not just a performance measure. When fully
implemented, it is the centerpiece of an integrated financial management system that
encompasses the full range of corporate financial decision-making--everything from
capital budgeting, acquisition pricing, and the setting of corporate goals to shareholder
communication and management incentive compensation. By putting all financial and
operating functions on the same basis, an EVA system effectively provides a common
language for employees across all corporate functions, linking strategic planning
with the operating divisions, and the corporate treasury staff with investor relations
and human resources. We begin by describing the shortcomings of the tops-down, EPS-based
model of financial management. Next we explain the rise of hostile takeovers--as
well as the phenomenal success of LBOs--in the 1980s as capital market responses
to the deficiencies of the EPS model. The EVA financial management system, we go
on to argue, borrows important aspects of the LBO movement--particularly, its focus
on capital efficiency and ownership incentives--but without the high leverage and
concentration of risk that limit LBOs to the mature sector of the U.S. economy. In
the final section, we present the outlines of an EVA-based incentive compensation
plan that is designated to simulate for managers and employees the rewards of ownership.
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