The Optimal And Actual Use Of Economic Value Added In Incentive Compensation
- Topics:
- Strategic Management Tools
- Tags:
- Accounting,
- St. Louis,
- Operational Accounting,
- Managerial Accounting,
- Incentive Based Compensation,
- Incentive,
- Financial Services,
- Finance,
- Economic Value-Added Analysis,
- Economic Value Added,
- ...
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Overview: From the executive summary: ‘Executive compensation is increasingly sensitive to stock returns. However, even abnormal stock returns are highly volatile, and an optimal contract shields the agent from as much variability as possible. It is not surprising then that non-stock performance measures, such as earnings and other accounting measures are explicitly used for short-term bonus payments. This paper examines a formal method for ascertaining the value of accounting earnings relative to that of its most popular competitor, Economic Value Added (EVA) for incentive contracting purposes’.
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Format: PDF | Size: 383KB | Date: Jun 2001 | Pages: 33
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