Economic Value Added (EVA super TM): an empirical examination of a new corporate performance measure.: An article from: Journal of Managerial Issues
Book Details
Author(s)Shimin Chen, James L. Dodd
ISBN / ASINB00097TGO0
ISBN-13978B00097TGO8
MarketplaceFrance 🇫🇷
Description
This digital document is an article from Journal of Managerial Issues, published by Pittsburg State University - Department of Economics on September 22, 1997. The length of the article is 6344 words. The page length shown above is based on a typical 300-word page. The article is delivered in HTML format and is available in your Amazon.com Digital Locker immediately after purchase. You can view it with any web browser.
From the author: Economic Value Added (EVA[TM]) has been acclaimed to be the most recent and exciting innovation in company performance measures. Although the popular press reports numerous anecdotal stories of successful EVA adoption, there has been little empirical evidence supporting the claim that EVA is the most useful measure of corporate performance. This study examines the EVA performance of 566 U.S. companies and compares the information usefulness of EVA with accounting earnings and residual income. Three conclusions result from the examination: (1) although improving EVA performance is associated with a higher stock return, the association is not as perfect as claimed by EVA advocates, (2) EVA is more powerful than traditional measures of accounting profit in explaining stock return; however, accounting earnings are still of significant incremental information value in addition to EVA, and (3) not only is EVA similar to residual income in concept, the two metrics are empirically comparable. The implications of the findings for researchers and practitioners are discussed.
Citation Details
Title: Economic Value Added (EVA super TM): an empirical examination of a new corporate performance measure.
Author: Shimin Chen
Publication:Journal of Managerial Issues (Refereed)
Date: September 22, 1997
Publisher: Pittsburg State University - Department of Economics
Volume: v9 Issue: n3 Page: p318(16)
Distributed by Thomson Gale
From the author: Economic Value Added (EVA[TM]) has been acclaimed to be the most recent and exciting innovation in company performance measures. Although the popular press reports numerous anecdotal stories of successful EVA adoption, there has been little empirical evidence supporting the claim that EVA is the most useful measure of corporate performance. This study examines the EVA performance of 566 U.S. companies and compares the information usefulness of EVA with accounting earnings and residual income. Three conclusions result from the examination: (1) although improving EVA performance is associated with a higher stock return, the association is not as perfect as claimed by EVA advocates, (2) EVA is more powerful than traditional measures of accounting profit in explaining stock return; however, accounting earnings are still of significant incremental information value in addition to EVA, and (3) not only is EVA similar to residual income in concept, the two metrics are empirically comparable. The implications of the findings for researchers and practitioners are discussed.
Citation Details
Title: Economic Value Added (EVA super TM): an empirical examination of a new corporate performance measure.
Author: Shimin Chen
Publication:Journal of Managerial Issues (Refereed)
Date: September 22, 1997
Publisher: Pittsburg State University - Department of Economics
Volume: v9 Issue: n3 Page: p318(16)
Distributed by Thomson Gale
