August 31, 2020

A Case of Mistaken Identity: Correcting the Record on EVA

Below is an excerpt from ISS EVA’s thought leadership paper “A Case of Mistaken Identity: Correcting the Record on EVA.” The full paper is available for download from the Institutional Shareholder Services (ISS) Economic Value Added (EVA) Resource Center.

In recent months, critics have emerged with claims that Economic Valued Added (EVA) is a less effective judge of corporate performance than other metrics, particularly in comparison to EBITDA. The assertions are based on studies that purport to show that EVA is less correlated to shareholder returns than EBITDA. These critics also express concern over the complexity of EVA as an impediment to its adoption. Some cite academic research that suggests that EVA does not help investors to value stocks or enhance portfolio returns.

We beg to differ on all counts. Indeed, the studies we have examined are so deeply flawed that any conclusions drawn from them cannot be taken seriously.


By Bennett Stewart, former Senior Advisor, ISS EVA

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