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CORPORATE GOVERNANCE AND THE USE OF EVA COMPENSATION
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Ralph DeFeo, Ehsan Nikbakht 
, Andrew C. Spieler
Abstract
The purpose of this paper is to determine if companies that chose to incorporate Economic Value Added (EVA®) as part of their executive compensation package tend to have better corporate governance than similar firms who have not chosen to use EVA®. EVA® is an economic profit metric developed by Stern Stewart & Co., which is calculated by taking the Net Operating Profits after Taxes (NOPAT) and subtracting a capital charge from it. Through the use of binary logistic regression the strength of several key corporate governance measures were tested in order to ascertain whether they have a significant impact on influencing a firm to use EVA®. A major finding is that firms that employed EVA® as part of their compensation package tend to have a weaker corporate governance.
Keywords: Corporate Governance, EVA, Executive Compensation
How to cite this paper: DeFeo, R., Nikbakht, E., & Spieler, A. C. (2010). Corporate governance and the use of EVA compensation. Corporate Ownership & Control, 8(1), 37-48. https://doi.org/10.22495/cocv8i1p3
