• East Asian Journal of Business Economics (EAJBE)
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• v.5 no.1
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• pp.10-26
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• 2017

This paper explains the concept of Economic Value Added (EVA) that is gaining popularity in India. We also examine whether EVA is a superior performance measure, both for corporate disclosure and for internal governance. Of late, companies in India have started focusing on shareholders wealth creation by adopting value-based models for measuring shareholder value that helps to align managerial decision-making with the firm preferences. In recent years, the EVA framework is gradually replacing the 'traditional' measures of financial performance on account of its robustness and its immunity from 'creative' accounting. Even though some leading Indian companies have already joined the band wagon of their American counterparts in adapting the EVA-based corporate performance systems, many other are hesitating as there is no strong evidence that the EVA system works in India. Till now, EVA disclosures are "not mandatory for the Indian companies." Also, we examine the value-creation strategies of selected Indian companies by analyzing whether EVA better represents the market-value of these companies in comparison to conventional performance measures. The study indicates that "there is no strong evidence to support Stern Stewart's claim that EVA is superior to the traditional performance measures in its association with MVA." As part of this study, we have also extensively surveyed the EVA disclosures in the Annual Reports made by the same sample group of 500 corporations from India.

• Journal of Korean Society for Quality Management
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• v.29 no.4
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• pp.153-160
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• 2001

The proposed system measures business performance by considering both VA(Value-Added), which represents stakeholder's point of view and EVA(Economic Value-Added), which represents shareholder's point of view. To do so, we suggest a business performance scheme which utilizes VA per Capita (Value- Added/Workers) and EVA to Invested Capital(Economic Value-Added /Invested Capital). For effective measurement of business performance, we consider simultaneously not only quantitative financial factors such as VA, EVA and cash flow but also qualitative value drivers such as defect ratio, inventory level, customer satisfaction, enterprise culture and so on. However, we don't consider the qualitative factors due to the limited data. To demonstrate the performance of the system, we conducted a case study using financial data of Korean automobile industry over 16 years from 1981 to 1996, which is taken from database of KISFAS (Korea Investors Services Financial Analysis System).

• Journal of Korean Society of Industrial and Systems Engineering
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• v.22 no.50
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• pp.313-322
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• 1999

EVA(Economic Value Added) is a management performance evaluation tool that determines whether a business is earning more than its true cost of capital. Leading corporations like Coca-Cola, AT&T and Briggs&Stratton have set up EVA measurement systems throughout their organizations. EVA reflects opportunity cost of equity ignored in calculating accounting profit and emphasizes the efficiency of capital employed by measuring how much the manufacturing and selling activities produce the economic profit in excess of cost of gross capital. In this paper, we define the concept of EVA and present an example to show the usefulness of EVA.

• Proceedings of the Korean Institute Of Construction Engineering and Management
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• 2007.11a
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• pp.678-681
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• 2007

There is an increment in Mergers and Acquisitions(M&A) case in international construction market. The world best construction corporations are now merging or acquiring with other companies in variety fields to increase their share of the market in diversified markets and boost their sales. Similarly, M&A cases of Korean construction corporations are now increasing. Although M&A cases are now rapidly increasing, performances of M&A cases haven't been measured. With Economic Value Added technique, the M&A performances of Korean construction corporations are measured in this study.

• Journal of the Korea Safety Management & Science
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• v.16 no.1
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• pp.239-250
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• 2014

The purpose of this research is to implement and develop the Economic Cost Driver Size(ECDS) extended model to determine the optimal cash driver size with measurement complexity cost and allocation fail cost. ECDS model can be used to seek both measurement accuracy and time efficiency of the Activity-Base Costing (ABC). The study also develops Activity Priority Number (APN) to evaluate the importance of nonvalue-added activities improvement and to determine the representative cost driver of value-added activities when applying ECDS model. APN consists of Severity Priority Number (SPN), Undetectablitiy Priority Number (UPN) and Occurrence Priority Number (OPN). APN can be obtained from lower-stream activity, current activity, upper-stream activity in terms of hierarchical dependency of SIPOC (Supplier, Input, Process, Output, and Customer). In order to seek both efficiency of invested capital and reduction of overhead cost, the paper proposes the integrated ABC and Economic Value Added (EVA) model using redesigned ABC-based statement of comprehensive income and EVA-based statement of financial position. For a better understanding of the proposed ABC-EVA integrated model, numerical examples are demonstrated in this paper. Cost drivers of ABC and capital drivers of EVA in the proposed model can be used to reduce activity overhead cost from ABC-based statement of comprehensive income and to lessen activity capital charge from EVA-based statement of financial position.

• Proceedings of the Korea Technology Innovation Society Conference
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• 2004.05a
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• pp.37-47
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• 2004

기업의 경영자 및 투자자들은 당해 기업의 성과평가에 지대한 관심을 가지고 있다. 성과평 가에 사용되는 지표로는 당기순이익, 주당순이익, 자본자본이익율 등의 여러 지표가 사용되어 왔으나, 경제적 실질을 반영하기에는 발생주의에 기초한 기업회계의 한계로 인하여 기업가치평가의 실질적인 지표로 활용하기에는 한계를 지적 받고 있다. 이에 대한 대안으로 EVA(Economic Value Added)가 제시되었고, EVA에 대한 관심이 증대되고 있다. 이에 본 논문은 EVA의 기업가치와의 관계를 고찰하고 EVA의 활용방안을 제시 하고자 한다

• Health Policy and Management
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• v.12 no.3
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• pp.54-76
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• 2002

This study investigated how much EVA which evaluate firm's value can explain hospital bankruptcy prediction as a explanatory variable including financial indicators in Korea. In this study, artificial neural network and logit regression which are traditional statistical were used as the model for bankruptcy prediction. Data used in this study were financial and economic value added indicators of 34 bankrupt and -:4 non-bankrupt hospitals from the Database of Korean Health Industry Development Institute. The main results of this study were as follows: First, there was a significant difference between the financial variable model including EVA and the financial variable model excluding EVA in pre-bankruptcy analysis. Second, EVA could forecast bankruptcy hospitals up to 83% by the logistic analysis. Third, the EVA model outperformed the financial model in terms of the predictive power of hospital bankruptcy. Fourth, The predictive power of neural network model of hospital bankruptcy was more powerful than the legit model. After all the result of this study will be useful to future study on EVA to evaluate bankruptcy hospitals forecast.

• Journal of the Korea Safety Management & Science
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• v.16 no.3
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• pp.451-469
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• 2014

The purpose of this study is to implement and develop the integrated Economic Value Added (EVA) and Time-Driven Activity-Based Costing (TDABC) model to seek both improvement of Net Operating Profit Less Adjusted Tax (NOPLAT) and reduction of Capital Charge (CC). Net Operating Profit Less Adjusted Tax (NOPLAT) can be maximized by reducing the indirect cost of an unused resource capacity increased by Cost Capacity Ratio (CCR) of TDABC. On the other hand, Capital Charge (CC) can be minimized by improving the efficiency of Invested Capital (IC) considered by Weighted Average Cost of Capital (WACC) of EVA. In addition, the integrated system of TDABC using Balance Scorecard (BSC) and EVA is developed by linking between the lagging indicators and the three leading indicators. The three leading indicators include customer, internal process and growth and learning perspectives whereas the lagging indicator includes NOPLAT and CC in terms of financial perspective. When the Critical Success Factor (CSF) of BSC is cascading as a cause and an effect relationship, time driver of TDABC and capital driver of EVA can be used efficiently as Key Performance Indicator (KPI) of BSC. For a better understanding of the proposed EVA/TDABC model and BSC/EVA/TDABC model, numerical examples are derived from this paper. From the proposed model, the time driver of TDABC and the capital driver of EVA are known to lessen indirect cost from comprehensive income statement when increasing the efficiency of operating IC from the statement of financial position with unified KPI cascading of aligned BSC CSFs.

• Proceedings of the Korean Operations and Management Science Society Conference
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• 2000.04a
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• pp.78-81
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• 2000

정보통신의 패러다임이 글로벌 경쟁, 인터넷 중심의 멀티미디어, 이용자 중심의 서비스 창출, 파트너십에 의한 시장지배력 강화 등을 축으로 하여 급속히 변하고 있기 때문에, 얼마나 효과적으로 고객과 시장을 지향하는 가치경영 체계를 구축하느냐에 따라 통신사업자의 경쟁력 우위가 결정된다. 가치경영의 구체적인 효과는 EVA(Economic Value Added), CVA(Customer Value Added), PVA(People Value Added)와 같은 가치 지표들을 체계적으로 통신사업에 활용하느냐에 달려있다. 본 고에서는 통신사업자가 CVA 체계를 구축하기 위한 프레임웍, 데이터 수집 및 분석 체계, 내부 프로세스 및 피드백 등에 관하여 실천적인 방안을 제시한다.

• Journal of Information Technology Services
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• v.11 no.sup
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• pp.153-164
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• 2012

There is a belief that timely and precise data are important to decisions and the better decisions are related to better firm performance. However, empirical research investigating the effect of data quality on firm financial performance is still scarce up to recently. Current study empirically explores such an effect of data quality on firm accounting performance in the Korean manufacturing industry during 2008~2010 with secondary data. The results show that better data quality does not impact on sales and operating profit, but positively and significantly impacts on EVA(Economic Value Added). Raising the level of data quality management maturity by one level can increase EVA by about 34% in manufacturing firms.