Corporate value creation

Whether managers create or destroy shareholder value is critical for companies and their shareholders. It is also critical for managers because, very often, their compensation is (or aims to be) tied to their performance. The problem is, there isn’t an undisputed way to define value creation. In this chapter we discuss some definitions and pay special attention to both residual income and its most well-known variation, EVA.

What should be the goal of management?

On the face of it, this appears to be a simple question. We could argue that the goal ...

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