英语论文网

plans may simultaneously change other aspects of their operations that also could influence management decisions (e.g., management realignments, strategic repositionings, restructurings, etc.). Thus, observed changes in management behavior could be due at least in part to these other effects. Second, our sample is not random since firms choose voluntarily to adopt residual income-based plans. It could be, for example, that managers opt for residual income based compensation when they forecast success unrelated to the incentives in the plan.28 Finally, one should be careful not to interpret these results strictly as confirming shareholder value creation. While they suggest changes in management behaviors that are consistent with RI incentives, it remains for future research to confirm that resulting benefits have been realized by shareholders.

Share repurchases are tax favored over dividends in two respects – they are taxed at a lower rate for many taxpayers and taxpayers can choose whether to receive and thus be taxed on them. 28 See, for example, Chris Hogan and Craig Lewis, “The Long-Run Performance of Firms Adopting Compensation Plans Based on Economic Profits,” working paper, Vanderbilt University (1999), who argue that managers adopt RI-based plans opportunistically in anticipation of increased profitability and that adopting firms do not significantly outperform peer companies in creating shareholder wealth.

DISCUSSION AND SUMMARY The introduction of EVA and competing performance metrics can rightly be regarded as one of the most significant management innovations of the past decade. As key components of the shareholder value movement, they have stimulated both management interest and academic research. A variant of the long-appreciated concept of residual income, EVA is well understood to provide desirable management incentives under appropriate conditions. Less self-evident are two key claims that have been made regarding EVA as part of a heated competition that has emerged among metrics providers. These are that EVA better explains stock returns and firm values than traditional accounting earnings and that EVA better motivates managers to increase shareholder wealth. This article provides evidence from recent independent research regarding these claims. Regarding the first claim that EVA is more closely associated with stock returns and firm value than is net income, independent research suggests that EVA does not dominate traditional accounting earnings in associations with stock returns and firm values. On the contrary, the evidence suggests that earnings generally beats EVA in value relevance to market participants. One possible explanation is that Stern Stewart’s proprietary adjustments of GAAP earnings “undo” informative accounting accruals (e.g., bad debts and deferred taxes). Another possibility is that EVA and residual income contain little news beyond that already conveyed by earnings. If net income disclosures, for example, convey news regarding unexpected revenues and costs, and the market provides its own cost of capital estimate, there may be little news left to glean from EVA and residual income. Alternatively, market participants may apply a different set of adjustments than those provided by Stern Stewart (e.g., different amortization periods for.

 Capitalized marketing and R&D costs). It also is possible that, for time periods studied, market participants had yet本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。