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The Influence of Economic Value Added and Return on Assets on Created Shareholders Value: A Comparative Study in Jordanian Public Industrial Firms

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  • Sliman S. Alsoboa

Abstract

This study has two main objectives. The first one is to address the relationship between Economic Value Added (EVA) and Created Shareholders Value (CSV) in Jordanian public industrial firms (JPIF), comparing to the Return on Assets (ROA) over the period 2011-2015. The second objective is to address the possible superiority of EVA to ROA by explaining the changes in CSV for JPIF. In this study, CSV is measured using two models; Fernandez model and market value added model. Multiple and simple regressions were used in the study. These analyses have shown, generally, that the superiority of EVA in predicting and evaluating the CSV could be put into a conclusive and positive light compared to ROA. However, the results suggested that one financial measure cannot be enough to measure neither CSV nor firms¡¯ performance. Therefore, this study highly recommends that JPIF use a combination of different measure in assessing and evaluating their value and performance, especially modern indicators.

Suggested Citation

  • Sliman S. Alsoboa, 2017. "The Influence of Economic Value Added and Return on Assets on Created Shareholders Value: A Comparative Study in Jordanian Public Industrial Firms," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 9(4), pages 63-78, April.
    • Handle: RePEc:ibn:ijefaa:v:9:y:2017:i:4:p:63-78
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    References listed on IDEAS

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    Cited by:

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    2. Roristua Pandiangan & Etty Murwaningsari, 2020. "Effect of Investment Decision and Tax Management on Stock Liquidity," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 9(3), pages 64-77, July.

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    More about this item

    Keywords

    economic value added; return on assets; created shareholders value; market value added; Fernandez model; Jordan;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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