A decomposition model of Net Final Values (NFV), named Systemic Value Added (SVA), is proposed for decision-making purposes, based on a systemic approach introduced in Magni [Magni, C. A. (2003), Bulletin of Economic Research 55(2), 149-176; Magni, C. A. (2004) Economic Modelling 21, 595-617]. The model translates the notion of excess profit giving formal expression to a counterfactual alternative available to the decision maker. Relations with other decomposition models are studied, among which Stewart's [Stewart, G.B. (1991), The Quest for Value: The EVA (TM) Management Guide, Harper Collins, Publishers Inc]. The index here introduced differs from Stewart's Economic Value Added (EVA) in that it rests on a different interpretation of the notion of excess profit and is formally connected with the EVA model by means of a shadow project. The SVA is formally and conceptually threefold, in that it is economic, financial, accounting-flavoured. Some results are offered, providing sufficient and necessary conditions for decomposing NFV. Relations between a project's SVA and its shadow project's EVA are shown, all results of Pressacco and Stucchi [Pressacco, F. and Stucchi, P. (1997), Rivista di Matematica per le Scienze Economiche e Sociali 20, 165-185] are proved by making use of the systemic approach and the shadow counterparts of those results are also shown.

On decomposing net final values: EVA, SVA and shadow project / Magni, Carlo Alberto. - In: THEORY AND DECISION. - ISSN 0040-5833. - STAMPA. - 59:1(2005), pp. 51-95. [10.1007/s11238-005-8631-5]

On decomposing net final values: EVA, SVA and shadow project

MAGNI, Carlo Alberto
2005

Abstract

A decomposition model of Net Final Values (NFV), named Systemic Value Added (SVA), is proposed for decision-making purposes, based on a systemic approach introduced in Magni [Magni, C. A. (2003), Bulletin of Economic Research 55(2), 149-176; Magni, C. A. (2004) Economic Modelling 21, 595-617]. The model translates the notion of excess profit giving formal expression to a counterfactual alternative available to the decision maker. Relations with other decomposition models are studied, among which Stewart's [Stewart, G.B. (1991), The Quest for Value: The EVA (TM) Management Guide, Harper Collins, Publishers Inc]. The index here introduced differs from Stewart's Economic Value Added (EVA) in that it rests on a different interpretation of the notion of excess profit and is formally connected with the EVA model by means of a shadow project. The SVA is formally and conceptually threefold, in that it is economic, financial, accounting-flavoured. Some results are offered, providing sufficient and necessary conditions for decomposing NFV. Relations between a project's SVA and its shadow project's EVA are shown, all results of Pressacco and Stucchi [Pressacco, F. and Stucchi, P. (1997), Rivista di Matematica per le Scienze Economiche e Sociali 20, 165-185] are proved by making use of the systemic approach and the shadow counterparts of those results are also shown.
2005
59
1
51
95
On decomposing net final values: EVA, SVA and shadow project / Magni, Carlo Alberto. - In: THEORY AND DECISION. - ISSN 0040-5833. - STAMPA. - 59:1(2005), pp. 51-95. [10.1007/s11238-005-8631-5]
Magni, Carlo Alberto
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11380/305071
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