An Analysis Of EVA And Other Measures Of Firm Performance Based On Residual Income

Topics:
Strategic Management Tools
Tags:
Analysis,
Social Science Electronic Publishing Inc.,
Sales Force Management,
Sales,
Performance Management,
Performance,
Operational Accounting,
Income,
Human Resources,
Finance,
...
Source:
Social Science Electronic Publishing

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Overview: From the executive summary: ‘The paper reviews the theoretical foundations of residual income as a tool for evaluating a firm's interim performance for purposes of assigning incentive compensation. Although residual income can be easily linked to the discounted cash flow model of firm valuation, it bears no necessary relation to wealth creation during any particular time period. Consequently, paying for performance using residual income to measure wealth creation can have incentive effects that are inconsistent with wealth creation’.

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Format: PDF | Size: 228KB | Date: May 2003 | Pages: 30


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