Investors are currently demanding shareholder value more strongly than ever. The financial theory has since long suggested that every company's ultimate aim is to maximize the wealth of its shareholders. That should be natural since shareholders own the company and as rational investors expect good long-term yield on their investment. In the past, this ultimate aim has however been often partly ignored or at least misunderstood. Under this background, so-called value based measures have received a lot of attention in the recent years. Currently the most popular value based measure is Economic Value Added,EVA.
This study seeks to clarify the concept of EVA especially from the viewpoint of banking industry. The objective of the study is threefold. Firstly, the study describes the theory and characteristics of EVA. This gives the framework to discuss other objectives. Secondly, the study proposes model on EVA for internal performance evaluation of banking industry. Lastly, management control system matching EVA will be proposed. It is called strategic monitoring.