Verifying of Information Content of Economic Value Added EVA in the Food-processing Sector of the Czech Republic
AbstractThis paper is devoted to today's very popular performance measure - Economic Value Added (EVA). The aim of this article is to investigate the relationship between Economic Value Added, traditional performance measures (ROA and ROE) and ability of creation of shareholder wealth for food-processing firms in the Czech Republic. The intent of this article is fulfilled by providing a simple regression tests of the hypothesis, that between EVA and traditional performance metrics there is not a tight linear dependency which would point out that EVA has the same information content as traditional performance measures and hypothesis, that the EVA measure is more associated with improved shareholder wealth than traditional performance measures. The results of regression analysis indicate in all cases a positive correspondence between EVA and financial performance metrics with very low dependency of EVA on the financial metrics and show higher quality information content of EVA indicator in the relationship to the ability of shareholder wealth creation than traditional performance measures. This fact supports the tested hypothesis as well as the conclusions of corporate finance theory, that from the theoretical point of view EVA is seen as a superior performance metric.
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Bibliographic InfoArticle provided by University of Economics, Prague in its journal Acta Oeconomica Pragensia.
Volume (Year): 2008 (2008)
Issue (Month): 5 ()
Postal: Redakce Acta Oeconomica Pragensia, Vysoká škola ekonomická v Praze, nám. W. Churchilla 4, 130 67 Praha 3
Find related papers by JEL classification:
- M - Business Administration and Business Economics; Marketing; Accounting
- G - Financial Economics
- Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Glenn D. Feltham & Grant E. Issac & Chima Mbagwu & Ganesh Vaidyanathan, 2004. "Perhaps Eva Does Beat Earnings-Revisiting Previous Evidence," Journal of Applied Corporate Finance, Morgan Stanley, vol. 16(1), pages 83-88.
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