|Implementing a variance decomposition analysis for firm performance measures (including EVA, Tobin's Q, and ROA) in Taiwan services sector from 1986 to 2008, the purpose of this paper is to examine the relative importance of industry, corporate, year, and transient industry effects on firm performance. Further, it is of interest whether distinct performance measures produce different analysis results. The evidence shows that the EVA explains 77.79% of the total variance in firm performance, which is much larger than other applied measures. The stable and transient industry effects on EVA are 37.84% and 21.75%, respectively, which suggests that structural characteristics of industry are more important for firm performance than corporate management strategies. The transient industry effects are much larger than other effects in the first period (1996-2001) but stable industry effects are more important for performance in the second period (2002-2008). This may indicate that the industry structure of Taiwan services sector has turned toward the stable development gradually. Finally, structural features of industry have a significant impact on firm performance in Taiwan's services sector.