A questionnaire was sent to a member of top management of seventy-six firms that have adopted EVA? type performance measures, forty of these firms having included the measure in their incentive compensation. Based on the respondents’ answers, EVA? erformance measures appear to help align the interests of management with those of the firm’s shareholders with the emphasis shifting from bottom-line earnings to earning more than the cost of employed capital.
The responses are compared with prior empirical work. In most cases, the observed results of management actions is consistent with the responses from this survey. This paper resulted from work done for my dissertation from the University of Washington. I wish to thank my committee members Gary Biddle, Robert Bowen, Eric Noreen, Terry Shevlin, and Naomi Soderstrom.
