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Wall Street’s contribution to management accounting: The Stern Stewart EVA® Financial Management System

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Wall Street’s contribution to management accounting: The Stern Stewart EVA® Financial Management System. / O'Hanlon, John; Peasnell, Ken.
In: Management Accounting Research, Vol. 9, No. 4, 31.12.1998, p. 421-444.

Research output: Contribution to Journal/Magazine › Journal article › peer-review

Harvard

O'Hanlon, J & Peasnell, K 1998, 'Wall Street’s contribution to management accounting: The Stern Stewart EVA® Financial Management System', Management Accounting Research, vol. 9, no. 4, pp. 421-444. https://doi.org/10.1006/mare.1998.0089

APA

O'Hanlon, J., & Peasnell, K. (1998). Wall Street’s contribution to management accounting: The Stern Stewart EVA® Financial Management System. Management Accounting Research, 9(4), 421-444. https://doi.org/10.1006/mare.1998.0089

Vancouver

O'Hanlon J, Peasnell K. Wall Street’s contribution to management accounting: The Stern Stewart EVA® Financial Management System. Management Accounting Research. 1998 Dec 31;9(4):421-444. doi: 10.1006/mare.1998.0089

Author

O'Hanlon, John ; Peasnell, Ken. / Wall Street’s contribution to management accounting: The Stern Stewart EVA® Financial Management System. In: Management Accounting Research. 1998 ; Vol. 9, No. 4. pp. 421-444.

Bibtex

@article{da61046b6847471f848b2717ca4c92ae,
title = "Wall Street{\textquoteright}s contribution to management accounting: The Stern Stewart EVA{\textregistered} Financial Management System",
abstract = "EVA@is a variant of residual income marketed by Stern Stewart & Co., a New York consulting firm, with the purpose of promoting value-maximizing behaviour in corporate managers. This paper reviews the EVA system in the light of this purpose. First, it outlines the rationale for the use of residual income in {\textquoteleft}value-based manage- ment{\textquoteright}, highlighting the potential shortcomings of residual income as a single-period performance indicator. Second, it considers the adjustments to GAAP-based account- ing advocated by Stern Stewart in order to produce a more economically meaningful version of residual income (EVA) which might serve as an effective indicator of single-period performance. Third, it examines the Stern Stewart approach to the setting of EVA benchmarks. Finally, it reviews the logic behind the use of the {\textquoteleft}bonus bank{\textquoteleft} to separate the award of EVA-based bonuses from the payment of such bonuses.",
author = "John O'Hanlon and Ken Peasnell",
year = "1998",
month = dec,
day = "31",
doi = "10.1006/mare.1998.0089",
language = "English",
volume = "9",
pages = "421--444",
journal = "Management Accounting Research",
issn = "1044-5005",
publisher = "Academic Press Inc.",
number = "4",

}

RIS

TY - JOUR

T1 - Wall Street’s contribution to management accounting: The Stern Stewart EVA® Financial Management System

AU - O'Hanlon, John

AU - Peasnell, Ken

PY - 1998/12/31

Y1 - 1998/12/31

N2 - EVA@is a variant of residual income marketed by Stern Stewart & Co., a New York consulting firm, with the purpose of promoting value-maximizing behaviour in corporate managers. This paper reviews the EVA system in the light of this purpose. First, it outlines the rationale for the use of residual income in ‘value-based manage- ment’, highlighting the potential shortcomings of residual income as a single-period performance indicator. Second, it considers the adjustments to GAAP-based account- ing advocated by Stern Stewart in order to produce a more economically meaningful version of residual income (EVA) which might serve as an effective indicator of single-period performance. Third, it examines the Stern Stewart approach to the setting of EVA benchmarks. Finally, it reviews the logic behind the use of the ‘bonus bank‘ to separate the award of EVA-based bonuses from the payment of such bonuses.

AB - EVA@is a variant of residual income marketed by Stern Stewart & Co., a New York consulting firm, with the purpose of promoting value-maximizing behaviour in corporate managers. This paper reviews the EVA system in the light of this purpose. First, it outlines the rationale for the use of residual income in ‘value-based manage- ment’, highlighting the potential shortcomings of residual income as a single-period performance indicator. Second, it considers the adjustments to GAAP-based account- ing advocated by Stern Stewart in order to produce a more economically meaningful version of residual income (EVA) which might serve as an effective indicator of single-period performance. Third, it examines the Stern Stewart approach to the setting of EVA benchmarks. Finally, it reviews the logic behind the use of the ‘bonus bank‘ to separate the award of EVA-based bonuses from the payment of such bonuses.

U2 - 10.1006/mare.1998.0089

DO - 10.1006/mare.1998.0089

M3 - Journal article

VL - 9

SP - 421

EP - 444

JO - Management Accounting Research

JF - Management Accounting Research

SN - 1044-5005

IS - 4

ER -