外文翻译---从一般角度看经济增值(编辑修改稿)

外文翻译---从一般角度看经济增值(编辑修改稿)内容摘要：

performance measure? First let us look into the claim of EVA being superior than the conventional measures such as ROI, ROE and ROA, which are based on the accounting figures. Most of these measures give us the rate of return earned by the firm with respect to capital invested in the firm. The most important limitation of these measures are derived from limitations inherent in the measurement of accounting profit. As per current accounting practices, while historicalcostbased accounting measures are being used to carry most of the assets in the balance sheet, revenue and expenses (other than depreciation) are recognized in the profit and loss account at their current value. Therefore accounting rate of returns do not reflect the true return from an investment and tend to be biased downwards in the 10 initial years and upwards in the latter years. Similarly as noted by Malkelainen (EsaMalkelainen 1998), distortion occurs basically due to the historical cost and straight line depreciation schedule used by most businesses to value their assets. This leads to a bias in these measures due to the position of assets of a firm at any given point in time. By position he refers to the current nature of the assets, more current the assets are, the accounting rate of return is closer to the true rate of return. This distortion will not be significant if there is a continuous stream of investments in assets . the value of the mix of assets is nearer to the current value of the assets. But the probability, that at any point of time, a firm should have such a position of assets is rare, in most cases either the assets are old or relatively new. This precludes these accounting measures from being used to reach any meaningful conclusion regarding the true performance of the firm. The other important limitation of accounting measures is that they ignore the cost of equity and only consider the borrowing cost. As a result it ignores the risk inherent in the project and fails to highlight whether the return is mensurate with the risk of the underlying assets. This might result in selecting projects that produce attractive rate of return but destroys firm value because their cost of capital is higher than the benchmark return established by the management. On the other hand accounting measures encourage managers to select projects that will improve the current rate of return and to ignore projects even if their return is higher than their cost of capital. Selection of projects with returns higher than the current rate of return does not automatically increase shareholders’ wealth. Taking up only those projects, which provide returns that are higher than the hurdle rate (cost of capital) results in increasing the wealth of the shareholder. Therefore use of ROE, ROA or similar accounting measures as the benchmark, might result in selection of those projects that though provide rate of return higher than the current rate of return destroys firmvalue. Similarly use of these measures result in continuing with activities that destroys firm value until the rate of return falls below the benchmark rate of return. EVA proponents claim that because of these imperfections, the accounting based measures are not good proxies for value creation. Managerial pensation based on these measures does not encourage value enhancement actions by managers. Value enhancement and earnings are two different things and might be at crosspurposes because shortterm performance might be improved at the cost of long term health of the firm. Activities involving enhancement of current earnings may be short term in nature, whereas any value enhancing activities should focus on long term well being of the firm. Avoidance of discretionary costs improves current performance while destroying value of the firm. Managers’ focus on shortterm performance will increase as long as their rewards are tied to the current performance over longterm value enhancement (Damodaran 1998,。