Business, Management and Accounting
4 years ago

Evidence shows EVA fails to measure Wealth Creation accurately, impacting investors.

IESE Research Papers
Shareholder value creators and shareholder value destroyers in Europe. Year 2002
Pablo Fernández, Laura Reinoso

Paper Summary

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The article quantifies shareholder value creation for 276 American companies from 1998 to 2001. Microsoft was the top creator of shareholder value in 2001, while Cisco was the biggest destroyer. Wal-Mart Stores led in creating shareholder value over the four-year period. The study found that EVA does not accurately measure Wealth Creation, with a low correlation between EVA and created shareholder value. Many companies had negative EVA but positive created shareholder value, showing a significant discrepancy between the two metrics.