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The EVA® Business Philosophy: Management Accounting Evidence from New Zealand

(Josie McLaren is at the University of Newcastle upon Tyne Business School, University of Newcastle upon Tyne, U.K)

Pacific Accounting Review

ISSN: 0114-0582

Article publication date: 1 March 2004



This paper considers firstly whether EVA® meets the objectives of benefit sharing and secondly, whether it can assist in achieving integration within the decentralised organisation. The empirical evidence presented is based on case study investigation of three New Zealand organisations, one quoted firm and two state‐owned enterprises, from a management accounting perspective. The results demonstrate firstly that EVA® can help to promote the benefit sharing philosophy through the use of value drivers, although benefit sharing was not the sole motivation for EVA® implementation. Secondly, integration is not necessarily achieved within the organisation. The use of EVA® can actually hinder vertical linkages within the firm, if decentralised units demonstrate a high degree of economic dependence. Integration between ex ante and ex post measures of EVA® is inhibited by a lack of understanding of the measure. Furthermore, integration between shareholder and managerial objectives is hindered by managerial selfinterest and action may be necessary to eliminate goal incongruence. Finally, the case study methodology is ideal for the study of EVA®, as it provides finer quality information than external analysis at the firm level, leading to more robust conclusions concerning the range of acceptable approaches to the philosophy of EVA®, and its evolution over time.



(2004), "The EVA® Business Philosophy: Management Accounting Evidence from New Zealand", Pacific Accounting Review, Vol. 16 No. 1, pp. 1-30.



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