 This paper explains in depth the Economic Value Added (EVA) framework, its proper use and compares the framework to other value measurement frameworks.
What is Economic Value Added (EVA) Framework?
Is Economic Value Added (EVA) framework superior to other value measurement frameworks for corporate reporting and internal governance? This paper concludes that although EVA does not provide additional information to investors, it can play a critical role in "motivating and educating employees to differentiate between value creating and value destructing activities. This would lead to direct all efforts in creating shareholder value."
The paper also highlights that improper application of EVA can lead to misleading investors.
