DATE PUBLISHED: AUGUST 7, 2018
A board literate in economic value can gain an enormous advantage in moving beyond compliance and the accounting numbers to fulfill the greater duty of working with management to deliver shareholder value.
That’s been elusive, but now it can be reduced to gaining knowledge about the EVA framework. It’s an investment of time that can yield a very high return, because EVA has a sensible way to answer all the financial questions that a board is asked to address. Setting financial goals and reviewing performance, judging business plans and valuing acquisitions, deciding to buy back or issue shares, even structuring management incentives can all fall under its watchful eye.