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| Author: | Riceman, S. S. Cahan, S. F. Lal, M. |
| Title: | Do managers perform better under EVA bonus schemes? |
| Journal: | European Accounting Review
2002 : VOL 11:3, p. 537-572 |
| Index terms: | MANAGERS PERFORMANCE APPRAISAL VALUE ADDED ACCOUNTING |
| Language: | eng |
| Abstract: | Economic Value Added (EVA) is a performance measure that is being used by an increasing number of companies, but academic research on EVA is limited. In addition, all prior empirical academic studies on EVA have used the firm as the unit of analysis. In this study, the authors examine the effect of EVA on the performance of individual managers. Specifically, the authors examine whether managers on EVA-based bonus plans outperform managers on traditional accounting-based bonus plans. The authors are able to test this because the authors have access to an EVA-focused company that has managers on both EVA and traditional bonus plans. The authors' results suggest that managers on EVA bonus plans who understand the EVA concept perform better than managers on traditional bonus plans. |
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