African Journal of
Business Management

  • Abbreviation: Afr. J. Bus. Manage.
  • Language: English
  • ISSN: 1993-8233
  • DOI: 10.5897/AJBM
  • Start Year: 2007
  • Published Articles: 4125

Full Length Research Paper

The ability of EVA (Economic Value Added) attributes in predicting company performance

  Issham Ismail    
School of Distance Education, Universiti Sains Malaysia, Minden 11800, Penang, Malaysia. 
Email: [email protected]

  •  Accepted: 18 February 2011
  •  Published: 30 June 2011

Abstract

 

In this study the major question is, can positive EVA (economic value added) outperform negative EVA in predicting company performance and either the period of study may play a vital role in explaining the variation of the stock return. The study found that neither value creator nor value destroyer had a relationship with stock return, as both models prove to be statistically insignificant. This finding is contrary to findings by Turvey et al. (2000). The value creators had a better relationship with earnings than value destroyers and this study indicates that, value creators have better earnings multiplier than value destroyers. It also indicates that, EVA had a better relationship with stock return over a longer period of the study.

 

Key words: Attributes of economic value added, positive economic value added, negative economic value added, company performance, stock return.