EVA AND SHAREHOLDER VALUE IN JAPAN

Abstract

In a series of individual presentations and a follow‐up set of exchanges, a group of academics and corporate practitioners discuss current problems with the Japanese corporate governance system and the potential role of EVA in addressing them. Professor Tak Wakasugi of Tokyo University identifies the problem as Japanese managers' devotion to “growth at all costs”‐an approach encouraged by the illusion that equity capital is a “free and unlimited resource.” Both Wakasugi and EVA advocate Joel Stern argue that adoption of the EVA performance measurement and incentive system would help impress upon Japanese managers the reality that capital is costly, but without causing them to cut back on promising investments (as would a single‐minded focus on a rate‐of‐return measure like ROE).In the three presentations that follow, Virgil Stephens, Toru Mochizuki, and Mark Newburg‐the CFOs, respectively, of Eastman Chemical, Coca‐Cola Japan, and NCR Japan‐ discuss the implementation and workings of EVA within their companies.