Return on Investment as a Measure of Divisional Performance Essay

Abstract

This research investigates, evaluates, and analyses both the traditional and the modern financial measures of divisional performance. There are two varying arguments in the determination of how divisional profitability should be calculated, they include;

1. Measurement of the financial performance of the division interns of profits and returns on the investments or stocks.
2. Measurement of the divisional manager’s performance.

In this research divisional performance measurement is based on these two determinants. Finally, the financial performance measures based on recent studies are developed. Nevertheless, financial measures cannot adequately measure all those factors that are critical to the success of a division in an organization. Nonfinancial measures like leadership, quality, innovation, etc should be evaluated due to their nature of affecting demand.

The most common methods of measuring divisional performance are absolute profits, profit ex-pressed as a percentage of investment (ROI), and residual income. During the 1990s residual income was replaced by the EVA measure.

ROI expresses divisional profit as a percentage of the assets employed in the division. Assets employed can be defined as total divisional assets, assets controllable by the divisional manager, or net assets while RI is defined as controllable contribution less a cost of capital charge on the investment controllable by the divisional manager. For evaluating the economic performance of the division RI can be defined as divisional contribution less a cost of capital charge on the total investment in assets employed by the division.

Introduction

Many companies have business activities in more than one country. The operations of some large corporations involve so many different countries that they are called multinational businesses. The problems of managing and accounting for a company that has international operations can be very complex, and a detailed study of these issues should be required. Because of the complexity of companies’ operations, it is difficult for top management to directly control operations. Therefore a company is divided into divisions and is allowed divisional managers to operate with a great deal of independence. When autonomous divisions are created arises the danger that divisional managers might not pursue tasks that are in the best interests of the company as a whole. The object of the article is the study of current research relating to divisional performance measurement. The goal of this article is to develop divisional performance measures that will motivate managers to pursue those tasks that will best benefit the company as a whole. The methods of archive and analytical research were used in the investigation. The basics of methodology consist of principles of systemic and comparative analysis of scientific literature.

The problems of companies, as well as divisional, performance measurement, had been investigated by most researchers for many years. In the earlier debate had been examined the traditional Approach, which is based on accounting profits and ratios derived from them, such as return on investment, assets, and income. During the 1990s was applied the economic value added (EVA) model was and further researches are designed for a value-based management approach. Since business performance measurement has become so topical, so recently.

The results from the Hyvohen study show that a fit between the customer-focused strategy and financial Performance measures improves customer performance (2007, 9).

The literature relating to EVA begins with the publication of the book by Stew-art, 1994, in which an author exposed his views about the usefulness of EVA as the basis of performance measurement of a company and its management at a total or a divisional level (1994, 9). In his empirical research, he examined the informational content of EVA. In the same line, the studies by Stewart, O’Byrne, and Grant using American data reached similar conclusions about the validity of EVA (1998, 92-96). Zimmerman made three basic points about divisional performance measurement that managers should keep in mind when attempting to choose between EVA and more conventional, accounting-based measures (1997, 98-109). The study using European data by Peixoto and the latter finding implies that EVA may perform well as a measure of evaluation of management performance when the goal is the maximization of shareholders’ wealth. However, several academic empirical studies by Dodd and Chen, Biddle, Bowen and Wallace, Chen and Dodd, as well as a more recent work by Fernandez, have offered contradictory results regarding the superior informational content of EVA over the traditional measures of performance, and the necessity for its application (1996, 26-28). The paper by Kyriazis and Anastasis using Greek data investigated the information content of EVA and unadjusted residual income in comparison with two accounting measures of performance, the net income and the operating income (2007, 1-100). Their findings fail to provide support for Stewart’s results (1994, 71-84).

Determinants of the divisional performance evaluation

There are two varying arguments in the determination of how divisional profitability should be calculated, they include;

1. Measurement of the financial performance of the division interns of profits and returns on the investments or stocks.
2. Measurement of the divisional manager’s performance.

All the allocations of indirect costs ought not to be included in the profitability measure. Corporate headquarters will also be interested in evaluating a division’s economic performance for decision-making purposes, such as expansion, contraction, and investment decisions. To measure the economic performance of the division many items that the divisional manager cannot influence, such as interest expenses, taxes, and the allocation of central administrative staff expenses, should be included in the profitability measure.

Keating used three measurement metrics in the evaluation of division managers namely (1997, 243-273);

I. Divisional accounting

II. Accounting

III. Stock price

Divisional financial performance measures

Profitability is only one of the factors contributing to a company’s objectives. Incorporation of non-financial measures, such as competitiveness, product leadership, productivity, quality, innovation, and flexibility in responding to changes in demand, creates the need to link financial and non-financial measures of performance. Divisional performance measurement should be based on a combination of financial and non-financial measures using the balanced scorecard approach. The financial performance evaluation measures examined in this article ought to be seen as one of the elements within the balanced scorecard. There are different methods innovated to establish the profitability of a venture; these methods are based on the quantitative aspects of the organizations. These methods include:

The Return On Investment (ROI)

Instead of focusing purely on the absolute size of a division’s profits, most companies focus on the return on investment (ROI) of a division (that is, profit as a percentage of the investment in a division). ROI expresses divisional profit as a percentage of the assets employed in the division. Assets employed can be defined as total divisional assets, assets controllable by the divisional manager, or net assets.

ROI provides a useful overall approximation of the success of a firm’s past investment policy by providing a summary measure of the ex-post return on capital invested. Kaplan and Atkinson had noted, however, that, without some form of measurement of the ex-post returns on capital, there is little incentive for accurate estimates of future cash flows during the capital budgeting process (1998, p. 23). Measuring returns on invested capital also focus managers’ attention on the impact of levels of working capital on the ROI. Another feature of the ROI is that it can be used as a common denominator for comparing the returns of dissimilar businesses, such as other divisions within the group or outside competitors. It has become the most popular method of analysis.

Despite the widespread use of ROI, several problems exist when this measure is used to evaluate the performance of divisional managers. Drury stated that is possible that divisional ROI can be increased by actions that will make the company as a whole worse off, and conversely, actions that decrease the divisional ROI may make the company as a whole better off (1999, pp. 205-228). That is, evaluating divisional managers based on ROI may not encourage goal congruence.

The residual income (RI)

This method came up to counter the shortcomings of the return on investments method. To evaluate the performance of divisional managers, RI is defined as controllable contribution less a cost of capital charge on the investment controllable by the divisional manager. For evaluating the economic performance of the division RI can be defined as divisional contribution less a cost of capital charge on the total investment in assets employed by the division.

A reason cited in favor of RI over the ROI measure is that RI is more flexible because the different cost of capital percentage rates can be applied to investments that have different levels of risk. The RI measure enables different risk-adjusted capital costs to be incorporated in the calculation, whereas the ROI cannot incorporate these differences. Corporate managers, therefore, want their divisional managers to focus on ROI so that their performance measure is congruent with outsiders’ measure of the company’s overall economic performance. A further reason, suggested by Kaplan and Atkinson, is that managers find percentage measures of profitability such as ROI More convenient since they enable a division’s profitability to be compared with other financial measures and the ROI rates of other divisions and comparable companies outside the group.

Christensen, Feltham, and Wu considered a setting in which a firm uses RI to motivate a manager’s investment decision (2002, 5). Textbooks often recommend adjusting the RI capital charge for market risk, but not for firm-specific risk. They demonstrated two basic flaws in this recommendation. First, the capital charge should not be adjusted for market risk. Charging a market risk premium results in ‘double’ counting because a risk-averse manager will personally consider this risk. Second, while investors can avoid firm-specific risk through diversification, a manager cannot. In the case of profit centers, ROI is a satisfactory performance measure, because if the ROI is maximized on a fixed quantity of capital, the absolute re-turn itself will also be maximized. However, in the case of investment centers, ROI appears to be an unsatisfactory method of measuring managerial performance, and in these circumstances the RI is preferable.

Surveys of methods used by companies to evaluate the performance of divisional managers indicate a strong preference for ROI over RI.

Why is ROI preferred to RI?

Skinner found evidence to suggest that firms prefer to use ROI because, being a ratio, it can be used for inter-division and inter-firm comparisons (1990, 137). ROI for a division can be compared with the return from other divisions within the group or with whole companies outside the group, whereas absolute monetary measures such as RI are not appropriate in making such comparisons. A second possible reason for the preference for ROI is that ‘outsiders’ tend to use ROI as a measure of a company’s overall economic performance. Corporate managers, therefore, want their divisional managers to focus on ROI so that their performance measure is congruent with outsiders’ measure of the company’s overall economic performance. A further reason, suggested by Kaplan and Atkinson, is that managers find percentage measures of profitability such as ROI More convenient since they enable a division’s profitability to be compared with other financial measures and the ROI rates of other divisions and comparable companies outside the group (1998, p. 23).

The Economic Value Added

The literature relating to EVA begins with the publication of the book by Stew-art, 1994, in which an author exposed his views about the usefulness of EVA as the basis of performance measurement of a company and its management at a total or a divisional level (1994, 9). In his empirical research, he examined the informational content of EVA. In the same line, the studies by Stewart, O’Byrne, and Grant using American data reached similar conclusions about the validity of EVA (1998, 92-96).

ROI and RI cannot stand alone as a financial measure of divisional performance. Short-run profitability is only one of the factors contributing to a company’s long-run objectives. ROI and RI are short-run concepts that deal only with the current reporting period, whereas managerial performance measures should focus on future results that can be expected because of present actions.

During the 1990s RI has been refined and re-named as economic value added (EVA) by the Stern Stewart consulting organization. Although the EVA model was thoroughly applied by Stern Stewart & Co., for the first time, in the 19s, economists had contemplated a similar concept for many years before that. It was the famous economist Alfred Marshall in 1890, who first spoke about the notion of economic profit, in terms of the real profit that a company makes when it covers, besides the various operating costs, the cost of its invested capital.

Stern Stewart & Co. developed the concept of the economic value-added model. The basic difference between the notions of economic value and RI concerns the method for calculating profits and invested capital. The EVA concept extends the traditional RI measure by incorporating adjustments to the divisional financial performance measure for distortions introduced by generally accepted accounting principles (GAAP).

EVA can be defined as:

EVA = Conventional divisional profit + accounting adjustment – cost of capital charge on divisional assets.

Adjustments are made to the chosen conventional divisional profit measure to replace historic accounting data with a measure of economic profit and asset values. Stern Stewart & Co. have developed approximately 160 accounting adjustments that may need to be made to convert the conventional accounting profit into a sound measure of EVA. However, they have indicated that most organizations will only need to use about 10 of the adjustments. These adjustments result in the capitalization of much discretionary expenditure by spreading these costs over the periods in which the benefits are received. Therefore adopting EVA should reduce some of the harmful side effects arising from using financial measures. This is because managers will not bear the full costs of the discretionary expenditures in the period in which they are incurred if the expenses are capitalized (1997, 6). Also because it is a restatement of the RI measure, compared with ROI, EVA is more likely to encourage goal congruence in terms of asset acquisition and disposal decisions. The results of Kyriazis and Anastasis research show that EVA does not appear to outperform the other measures in their analysis in terms of their association to stock returns (2007, 55). Meanwhile, EVA does not appear to have any significant advantage over RI in all their settings, suggesting that the Stern Stewart & Co. adjustments applied by the present study do not add significant information to the RI measure.

Stern Stewart & Co. suggested various adjustments in the financial statements of the firms, to move away from the concept of accounting profits caused by the application of the GAAP, and approach the notion of real economic value. Considering this, it follows that, if the EVA model with the adjustments that Stern Stewart & Co. proposes is closer to the real economic value of the firm, and then its application will enable management to monitor and control more efficiently the use of invested capital.

Stern Stewart & Co. developed EVA to produce an overall financial measure that encourages senior managers to concentrate on the delivery of shareholder value. According to Stern Stewart & Co. the aim of managers of companies, whose shares are traded in the stock market, should be to maximize shareholder value. It is therefore important that the key financial measure that is used to measure divisional or company performance should be congruent with shareholder value. They claim that, compared with other financial measures, EVA is more likely to meet this requirement and also to reduce dysfunctional behavior.

According to Stern, Stewart, and Chew, EVA is not just another performance measure but can be the main part of an integrated financial management system, leading to decentralized decision making (1997, 20). Thus, the adoption of EVA should indirectly bring management changes, which in turn can enhance firm value.

The Development of Financial Performance Measures

The primary objective of profit-making organizations is to maximize shareholder value. Therefore Performance measures should be based on the value created by each division. However, direct measures of value creation are not possible because the shares for only the business as a whole are traded on the stock market. Instead, most firms use accounting profit or ROI measures as a surrogate for changes in market values. Also, even if market measures could be derived, they may not be ideal performance measures because they are affected by many factors that managers cannot control. In contrast, accounting performance measures are not affected to the same extent by some of the uncontrollable factors that cause the volatile changes in share values. Furthermore, using accounting measures such as ROI or RI as performance measures can encourage managers to become short-term oriented.

The empirical study by Kyriazis and Anastasis indicate that the operating profit shows the highest mean value among the income measures, whereas the RI has the lowest mean value, because of the high positive values of the Stern Stewart & Co. adjustments in profits and invested capital (2007, 1-100). The EVA has a negative mean value. Apart from the market value added (MVA), which appears to be the most volatile variable in their study, net income has the highest standard deviation among the other profitability measures. Meanwhile, the results of the tests between all the other variables reveal that there is no ‘dominant’ profitability measure in terms of information content. Ideally, divisional performance should be evaluated based on economic income by estimating future cash flows and discounting them to their present value. This calculation could be made for a division at the beginning and the end of a measurement period. The difference between the beginning and ending values represents the estimate of economic income.

The main problem with using estimates of economic income to evaluate performance is that it lacks precision and objectivity. It is also inconsistent with external financial accounting information that is used by financial markets to evaluate the performance of the company as a whole. Corporate managers may likely prefer their divisional managers to focus on the same financial reporting measures that are used by financial markets to evaluate the company as a whole.

Various approaches can be used to overcome the short-term orientation that can arise when accounting profit-related measures are used to evaluate divisional performance. One possibility is to improve the accounting measures. EVA is computed by making accounting adjustments to the conventional divisional profit calculation. These adjustments represent an economic estimation income attempt.

Incorporating a cost of capital charge is also a further attempt to approximate economic income. However, conventional accounting profits are the starting point for calculating EVA and these are based on historic costs, and not future cash flows so that EVA can only provide a rough approximation of economic income. Regarding the relative explanatory power of the measures under comparison, EVA seems to dominate net income, operating income, and RI. This is in line with the theory behind EVA, which should equal the present value of all EVA’s expected to be earned by the company in the future and therefore should be more highly correlated with MVA than the traditional accounting measures.

Dodd and Chen found that EVA appeared to have higher explanatory power when it was compared with the return on equity (ROE) and the earnings per share (EPS), but when it was compared with a simple measure of RI they could not identify any significant incremental informational content (1996, 27). Chen and Dodd also offered empirical evidence against the validity of the EVA (1996, 28) However, in the same study, the variable of RI appeared to have a marginally higher explanatory power than operating income.

In one of the few published studies using European data by Peixoto, it was reported that the net income variable has a higher informational content than EVA and operating profits when the dependent variable is the market value of the companies (2002, 153). However, EVA appeared to have superior informational content when the dependent variable is the MVA. The latter finding implies that EVA may perform well as a measure of evaluation of management performance when the goal is the maximization of shareholders’ wealth.

From reviewing several other studies it is clear that when the objective is to examine the performance of firms, which have adopted control measures based on EVA or MVA, then most researchers (Lehn and Makhija, 1997, 94) agree that EVA has the highest explanatory power of stock re-turns than any other variable and leads to increased operational efficiency (Wallace, 1996, 277). These results imply that EVA may constitute the basis for establishing an efficient management performance and remuneration system. This finding fails to provide adequate support for Stewart’s claim that EVA ‘tracks’ changes in MVA better than any other performance measure since it appears that the other earnings measures are equally competent in explaining the variation in MVA (1994, 79). These results were obtained from a sample of companies with different characteristics than those of the US market, to be consistent with the findings of Chen and Dodd for a sample of US companies, which also found no evidence of EVA outperforming various specifications of operating income, concerning their association with stock returns (1996, 28).

Kyriazis and Anastasis examined the relationship between the firms’ MVA and EVA, to find that EVA does not outperform significantly the other measures in their analysis, failing to provide adequate support to one of Stern Stewart’s & Co. basic claims, according to which MVA for each period should equal the current realization of EVA plus the present value of all expected future EVA’s (2007, 72). EVA, even if it is a good proxy of the real economic value of a firm, reflects a current realization of this value, while stock returns, and especially abnormal returns, and are a result of a shift in the market’s expectations for the firm’s future cash flows.

According to Drury, EVA is the long-term counterpart of the discounted net present value (NPV) (1999, 220). Thus, given that maximizing NPV is equivalent to maximizing shareholder value, then maximizing the present value of EVA is also equivalent to maximizing shareholder value, and Stern Stewart’s & Co. claim that EVA is congruent with shareholder value would appear to be justified. Consequently, if divisional managers are evaluated based on the long-run present value of EVA, their capital investment decisions should be consistent with the decisions that would be taken using the NPV rule. Discounted EVA or the economic profit (EF), for few periods, is equal to the result, which obtained when discounting cash flows, i.e. NPV. The author of this article obtains this result from a sample of corporations by estimating the business value (1994, 71). Zimmerman made three basic points about divisional performance measurement that managers should keep in mind when attempting to choose between EVA and more conventional, accounting-based measures (1997, 99).

They had an additional motive to examine if the explanatory power of EVA was enhanced by this shift in the status of the market, leaving scope for the firm’s managers and outside investors to adopt it as a performance evaluation benchmark shortly. Incremental information tests suggested that EVA unique components add only marginally to the information content of accounting profit measures, suggesting that better estimates of the cost of capital, or the introduction of different ac-counting adjustments could add significant information content to the EVA measure, and thus they do not add greater value relevance to the EVA measure. Although the EVA model in Kyriazis and Anastasis analysis did not seem to have superiority in explaining the stock returns of ASE listed companies, it was proved to have some explanatory power about the other traditional accounting measures (2007, 37). This may have serious implications for the managers of Greek listed companies and institutional foreign and domestic investors, who might want, in the future, to make their investment decisions based on economic profit measures, along with the traditional measures of performance.

Clearly, under the EVA approach performance measurement gains new meaning in contrast with the traditional approach, which is merely based on the simple notions of accounting profits and the relevant ratios derived from them, as ROE and ROA. The difference is that the traditional performance measurement benchmarks do not consider the cost of invested capital to get returns on the investments. Thus, under the traditional approach, two companies that have the same ROE would be considered equally successful, whereas under the EVA approach the same conclusion could not be reached if these two firms had a different cost of capital that is if their economic profit or RI was different.

From the view of Stern, steward, and chew, the adoption of EVA should lead to more efficient use of corporate resources by encouraging managers to act as share-holders, without the need for the external control mechanism of the market (1997). Kyriazis and Anastasis consider that in any market, in which the mitigation of the agency problem cannot occur via hostile takeovers, the necessity for the application of internal corporate control mechanisms and EVA-based financial management systems is greater (2007, 81).

Recent studies report the increasing use of non-financial measures in performance measurement and compensation systems. Instead of focusing purely on the absolute size of a division’s profits, most companies focus on the return on investment (ROI) of a division (that is, profit as a percentage of the investment in a division). ROI expresses divisional profit as a percentage of the assets employed in the division. Assets employed can be defined as total divisional assets, assets controllable by the divisional manager, or net assets. The financial performance measures based on recent studies are developed. Nevertheless, financial measures cannot adequately measure all those factors that are critical to the success of a division in an organization. Nonfinancial measures like leadership, quality, innovation, etc should be evaluated due to their nature of affecting demand. The study by Banker, Potter, and Srinivasan provides empirical evidence on the behavior of non-financial measures and their impact on firm performance (2000, 65-92).

Conclusions

The most common methods of measuring divisional performance are absolute profits, profit ex-pressed as a percentage of investment (ROI), and residual income. During the 1990s residual income was replaced by the EVA measure. All the allocations of indirect costs ought not to be included in the profitability measure. Corporate headquarters will also be interested in evaluating a division’s economic performance for decision-making purposes, such as expansion, contraction, and investment decisions. To measure the economic performance of the division many items that the divisional manager cannot influence, such as interest expenses, taxes, and the allocation of central administrative staff expenses, should be included in the profitability measure.

Under the EVA approach, performance measurement gains new meaning in contrast with the traditional approach, which is based on accounting profits and the relevant ratios derived from them. However, the use of EVA, or simpler residual income measures, as a tool for internal management control requires further empirical research. Despite the widespread use of ROI, several problems exist when this measure is used to evaluate the performance of divisional managers. Drury stated that is possible that divisional ROI can be increased by actions that will make the company as a whole worse off, and conversely, actions that decrease the divisional ROI may make the company as a whole better off (1999, 205-228). That is, evaluating divisional managers based on ROI may not encourage goal congruence.

Recent studies report the increasing use of non-financial measures in performance measurement and compensation systems. Instead of focusing purely on the absolute size of a division’s profits, most companies focus on the return on investment (ROI) of a division (that is, profit as a percentage of the investment in a division). ROI expresses divisional profit as a percentage of the assets employed in the division.

Financial performance measures cannot stand alone as a measure of divisional performance. Profitability is only one of the factors contributing to a company’s objectives. Incorporation of non-financial measures, such as competitiveness, product leadership, productivity, quality, innovation, and flexibility in responding to changes in demand, creates the need to link financial and non-financial measures of performance. Divisional performance measurement should be based on a combination of financial and non-financial measures using the balanced scorecard approach. The financial performance evaluation measures examined in this article ought to be seen as one of the elements within the balanced scorecard.

References

1. Bacidore, J., Boquist, J., Milbourn, T., & Thakor, A., 1997. The Search for the best Financial Performance Measure. Financial Analysts Journal, 53 (3), 391-419.
2. Banker, R., Potter, G., & Srinivasan, D., 2000. An Empirical Investigation of an Incentive Plan that includes Non Financial Performance Measures. Accounting Review. 75(1), 65-92.
3. Biddle, G., Bowen, R., & Wallace, J., 1999. Evidence on Eva. Journal of Applied Corporate Finance, 12(2), 275-300.
4. Bouwens, J., & Lent, V., 2007. Assessing the Performance of Business unit Managers. Journal of Accounting Research, 45(4), 667-697.
5. Chen, S., & Dodd, J., 1997. Economic Value Added: An Empirical Examination Of A New Corporate Performance Measure. Journal of Managerial Issues, (9), 26-28.
6. Chenhall, R., & Langfield K., 2007. Multiple Perspectives of Performance Measures. European Management Journal, 25(4), 226-282.
7. Christensen, P., Feltham, G., & Wu, M., 2002. Cost of capital: in residual income for performance evaluation. Accounting Review, 77(1), 1-23.
8. Dodd, J., & Chen, S., 1996. Eva: A New Panacea? Business and Economic Review, 42(4), 27-29.
9. Drury, C., 2004. Management and Cost Accounting. 6^th Ed. London: Thomson Learning. P. 205-228.
10. Hyvohen, J., 2007. Strategy performance measurement techniques, information technology of the firm, and their links to organizational performance. Management accounting research, 18(3).
11. Kaplan, R., Atkinson, A., 1998. Advanced Management Accounting. Prentice Hall.
12. Keating, A., 1997. Determinants of Divisional Performance Evaluation Practices. Journal of Accounting and Economics, 24(3), 243-273.
13. Kleiman, R., 1999. Some New Evidence on Eva Companies. Journal of Applied Corporate Finance, 12(2), 80-91.
14. Kyriazis, D., & Anastassis, C., 2007. The Validity of the Economic Value Added Approach: An Empirical Application. European Financial Management, Vol 13(1), 1-100.
15. Lehn, K., & Makhija, A., 1997. Accounting Profits, and CEO Turnover: An Empirical Examination, 1985–1994. Journal of Applied Corporate Finance, 10(2), 90-97.
16. Neely, A., 1999. The Performance Measurement Revolution: Why Now And What Next? Journal of Operations and Production Management, 19(2), 76-78.
17. O’byrne, S., 1998. Eva and Its Critics. Journal of Applied Corporate Finance, 12(2), 92-96.
18. Peixoto, S., 2002. Economic Value Added: An Application to Portuguese Public Companies. Working Paper, Porto: Modern University of Porto.
19. Skinner, R., 1990. The role of profitability in divisional decision making and performance. Accounting and Business Research, (2), 135-141.
20. Stern, J., Stewart, G., & Chew, D., 1997. The Eva Financial Management System. Studies in International Corporate Finance and Governance Systems. New York, Oxford University Press.
21. Stewart, G., 1994. Eva: Fact or Fantasy. Journal of Applied Corporate Finance, 17(2), 71-84.
22. Wallace, J., 1996. Adopting Residual Income-Based Compensation Plans: Do You Get What You Pay For? Journal of Accounting and Economics, 24 (3), 275-300.
23. Zimmerman, J., 1997. Eva and Divisional Performance Measurement: Capturing Synergies and Other Issues. Journal of Applied Corporate Finance, 10 (2), 98-109.