Journal of Applied Corporate Finance Publishes Special Issue on Fortuna Advisors' Innovations in Value-Based Management

PONTE VEDRA BEACH, Fla., March 31, 2025 /PRNewswire/ -- The Journal of Applied Corporate Finance this month released a special issue dedicated to the research and thought leadership of Fortuna Advisors, an innovator in corporate finance, strategy, and value-based management. This collection of articles explores the evolution of economic profit as a guiding principle for corporate decision-making, showcasing Fortuna Advisors' contributions to the field.

More than four decades ago, Michael Jensen and William Meckling introduced the concept of agency costs, emphasizing conflicting interests between corporate managers and shareholders. This insight spurred innovative executive compensation structures designed to align managerial incentives with long-term value creation. By the early 1990s, value-based management emerged as a transformative approach, exemplified by Economic Value Added (EVA), which was introduced by Stern Stewart & Co. and widely adopted by major corporations such as Coca-Cola and AT&T.

As financial frameworks evolved, the limitations of EVA—particularly its constraints on growth investments—became apparent. Recognizing these challenges, Greg Milano, a former Stern Stewart partner, founded Fortuna Advisors to refine and extend value-based management principles. Milano's critical insights, including on the distortions created in traditional accounting by depreciation, led to the development of Residual Cash Earnings (RCE), a growth-friendly measure of economic profit that demonstrates a stronger correlation with stock returns across industries and market cycles. Journal of Applied Corporate Finance Editor-in-Chief, Don Chew, calls RCE a "better measure of EVA, suited for both growth and value companies."

This special issue highlights the continued evolution of value-based management and features seminal articles and extensive research on capital deployment, strategy, share repurchases, and shareholder activism—while also advancing groundbreaking concepts such as Buyback ROI and Reinvestment Effectiveness. Key highlights include the introduction of RCE in, "Postmodern Corporate Finance," two compelling roundtable discussions on capital deployment, and case studies showcasing how RCE enhances managerial decision-making and corporate culture, and a new article exploring common obstacles to value-based management.

Fortuna Advisors invites corporate leaders, finance professionals, and scholars to explore this special issue and gain valuable insights into the future of value-based management.

Fortuna Advisors, founded by Greg Milano, is a thought leader in corporate finance and strategy, dedicated to helping companies maximize long-term value creation.

Journal of Applied Corporate Finance is a leading publication dedicated to bridging the gap between finance theory and corporate practice.

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SOURCE Fortuna Advisors LLC