EVA was Stewart's contribution (in 1991) to the Shareholder Value framework originally introduced by Alfred Rappaport of Northwestern University. This theoretical framework emphasizes the imperative of adding shareholder value via the undertaking of specific financial and investment decisions at the corporate level and measuring that value with a metric similar to discounted cash flow analysis. EVA is Stern-Stewart's metric.
After reading the Motley Fools rave review above, I would issue one caveat to all of those "fools" who think they have found the holy grail to selecting winning stocks: EVA has been around for a long time (the theoretical work precedes THE QUEST FOR VALUE by decades) and is well-integrated into investment management methodologies. There have been several studies which demonstrate that selecting stocks based on EVA or even changes in EVA will not produce excessive returns for investors (See Damodaran). Thus, the real "value" of THE QUEST FOR VALUE for private investors is to focus attention on the importance of economic measures of value and to point out the limitations of accounting valuation measures like earnings and earnings growth.
Claims about how failing companies turned around into successes because they adopted EVA are not sufficiently supported. Those turnarounds could have happened for any of many other reasons. The claims would be believable if they were well supported with facts and deeper analysis. As they are, they detract from the overall quality of the book and raise questions about other claims made in it. At times the author's tone is condescending, as if we can all assume his statements don't need proof!!
The book could function as a fair reference but as most other reviewers have noted, there is no index, and the table of contents is about half a page! This is particularly difficult because the discussions of important concepts are somewhat spread about in the book.
On the positive side, the author's focus on return on capital is good and the reasoning well stated and easy to understand. By the same token, his discussions of what provides true value to the investor (and business manager) is good. But these are not very original. Either the book should have been about one-fourth as long, or the examples the author used to justify EVA should have been much more thoroughly developed.
However I would urge any potential customer (either financially astute or a beginner like myself) who is genuinely interested in Value, to look no further than "The Quest for Value".
The key resides in the style (fully informative yet at times conversational / humuorous), the content (rich in depth and explanation) and finally the extensive case studies and "war stories" that bring Valuation fully to life.
You dont have to be an accountant or corporate finance practioner to understand and apply the fundamental principles of EVA - in fact as the author sometimes alludes to, not possessing this background is perhaps a distinct advantage.
Investing in this Quest with Stern Stewart as my guide has helped me enormously.