Summary of EVA and Value-Based Management

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EVA and Value-Based Management book summary


8 Overall

9 Applicability

8 Innovation

7 Style


Kudos to S. David Young and Stephen F. O’Byrne, management consultants who largely steer clear of their industry’s usual empty catchphrases and superficial hype. Instead, their lucid explanation of the importance of shareholder value takes center stage. The heftiness of EVA and Value-Based Management may be daunting, but most readers will be satisfied with Part I’s strategic overview. The concepts reappear in Part II accompanied by a wealth of technical details, calculations and case studies to help finance professionals with nitty-gritty implementation of EVA (Economic Value Added) programs. The book honestly assesses EVA’s power to motivate managers, noting that some companies just are not well-suited for this performance metric. prescribes this book to corporate executives who have overdosed on consultant jargon but still want to drive value growth in their companies, and to finance specialists who seek a comprehensive roadmap to EVA implementation.

In this summary, you will learn

  • The definition of EVA and why it is a superior measure of shareholder value;
  • Which types of companies can benefit most from EVA; and
  • How EVA can be the centerpiece of an effective management compensation policy.

About the Author

S. David Young is a professor at INSEAD, and a consultant on EVA and value-based management for several American, European and Asian companies. Stephen F. O’Byrne is president and co-founder of Shareholder Value Advisors, Inc., and former senior vice president at Stern Stewart & Co.



The Significance of Shareholder Value
Although businesses exist to create value for their owners, corporate executives and managers do not always act to maximize shareholder value, because of perceived conflicts with other goals. Shareholder value does not necessarily conflict with good...

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