In Memoriam: Joel M. Stern, 77

Developed Concept of EVA While at Chase

Joel M. Stern, who created and developed the concept of economic value added (EVA)* while running Chase Financial Policy, Chase’s global consulting operation, died on May 21, 2019. He was 77.


Chairman and Chief Executive Officer of Stern Value Management, formerly Stern Stewart & Co, he was recognised as an authority on financial economics, corporate performance measurement, corporate valuation and incentive compensation and was a pioneer and leading advocate of the concept of shareholder value. He was also active in academia and in the media.  


After graduating from the University of Chicago's graduate program in Finance and Economics (MBA, Chicago-Booth, 1964), he joined the Chase Manhattan Bank. In 1982, after 18 years at Chase Manhattan, he started Stern Stewart.


He was the author of two books and co-author of six others – all in financial economics. He was the executive editor of the Journal of Applied Corporate Finance and a member of the Editorial Board of the Journal of Financial Management and Analysis.


He taught at or served on the adjunct faculties of several graduate business schools in America and abroad, including University of Maryland’s Robert H. Smith School of Business, Carnegie Mellon University's Tepper School of Business, The University of Chicago (Chicago-Booth), the University of Cape Town, Singapore Management University, Universidad Francisco Marroquín, Universidad EAFIT and the Lauder Business School. He was also part of the Executive Advisory Committee of the William E. Simon Graduate School of Business Administration at the University of Rochester and was a member of the University of Chicago's Council on the Graduate School of Business.


He was financial policy columnist for the London Sunday Times and The Financial Times. He has also wrote for the Wall Street Journal editorial page, the New York Times and Fortune, amongst other publications. He appeared on national business news programs, including Bloomberg TV’s Taking Stock with Pimm Fox, CNBC Asia’s Squawk Box, CNN’s Moneyline and Wall Street Week, where he was a rotating panelist for 17 years.


* In corporate finance, as part of fundamental analysis, economic value added (EVA) is an estimate of a firm's economic profit, or the value created in excess of the required return of the company's shareholders. EVA is the net profit less the capital charge ($) for raising the firm's capital. The idea is that value is created when the return on the firm's economic capital employed exceeds the cost of that capital. This amount can be determined by making adjustments to GAAP accounting. There are potentially over 160 adjustments but in practice only several key ones are made, depending on the company and its industry. EVA is a service mark of Stern Value Management.




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From Nicole Birrell: I was saddened to read of the recent passing of Joel Stern.  Our paths crossed only once, when he gave a guest lecture to the first intake for 1978 of the Chase Credit Course at Royex House, London, but he made a lasting impression. The class had about 20 participants from all over Europe.  We were all mesmerised by Joel’s energetic but engaging teaching style, and slightly panicked as the financial mathematics concepts he was trying to impart were hugely complex for a group of students that included graduates in such arcane areas as archeology!  This lecture was a standout moment in my credit course and has always stayed with me. In fact, I believe I still have somewhere in my archives the blue cover booklet that we were given at the time. Over the years I have been pleased to follow the evolution of Joel’s career and the significant contribution he has made to financial returns analysis in particular.  May he rest in peace.