A study for the introduction of EVA (Economic Value Added) as a management performance evaluation system in Korea

Abstract

This thesis focuses on finding a proper management performance evaluation measure that is fit well for sustainable wealth creation for shareholders, right decision-making of Korean companies and describing some introduction procedure strategies that should be considered when a Korean company wants to adopt the above proper management performance evaluation measure. To find a proper performance evaluation measure this thesis have reviewed and analyzed currently used performance measures in terms of explanation power for MVA (Market Value Added), theoretically the definitive performance measure of shareholders' wealth creation. Through analyzing empirical studies and case, even if there are still several unanswered questions remained about EVA(Economic Value Added), EVA was selected practically the best performance measure due to its highest correlation with MVA amongst current performance measures and EVA adopting companies' superiority in performance compared with non-EVA peer companies. As a result, this thesis recommended Korean companies to adopt EVA as a management performance measure and motivation tool with well designed introduction strategies.