IDEAS home Printed from https://ideas.repec.org/a/prg/jnlaop/v2008y2008i5id160p32-46.html
   My bibliography  Save this article

Verifying of Information Content of Economic Value Added EVA in the Food-processing Sector of the Czech Republic

Author

Listed:
  • Gabriela Chmelíková

Abstract

This 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.

Suggested Citation

  • Gabriela Chmelíková, 2008. "Verifying of Information Content of Economic Value Added EVA in the Food-processing Sector of the Czech Republic," Acta Oeconomica Pragensia, University of Economics, Prague, vol. 2008(5), pages 32-46.
  • Handle: RePEc:prg:jnlaop:v:2008:y:2008:i:5:id:160:p:32-46
    as

    Download full text from publisher

    File URL: http://www.vse.cz/polek/download.php?jnl=aop&pdf=160.pdf
    Download Restriction: free of charge

    File URL: http://www.vse.cz/aop/160
    Download Restriction: free of charge

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. 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.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Economic Value Added; Traditional Performance Metrics; Information Content; Food-processing sector;

    JEL classification:

    • M - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics
    • G - Financial Economics
    • Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:prg:jnlaop:v:2008:y:2008:i:5:id:160:p:32-46. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Frantisek Sokolovsky). General contact details of provider: http://edirc.repec.org/data/uevsecz.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.