REMUNERATION AND CREATION OF VALUE FOR STAKEHOLDERS: ECONOMIC VALUE ADDED AS A MANAGEMENT TOOL

Abstract

Economic Value Added (EVA) has become a widely accepted tool in developed economies to measure the value created by a firm. The first advantage of using EVA with respect to other traditional measures is that it considers a cost for equity capital (Stewart, 1991). The second advantage of using such a measure is that it differs from accounting measures by suggesting adjustments that transform all measured quantities from the accrual basis into the cash basis. The purpose of this paper is to demonstrate that variable remuneration represents a higher economic value added for the firm when it is linked to productivity increases.