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Further thoughts on the relationship between economic value added and stock market performance


  • David Sparling

    (Department of Agricultural Economics and Business, University of Guelph, Guelph, Ontario, N1G 2W1, Canada. E-mail:

  • Calum G. Turvey

    (Department of Agricultural Resource and Food Economics, and, the Food Policy Institute, Rutgers University, New Brunswick, NJ 08901. E-mail:


As authors of a previous study questioning the strength of the relationship between EVA and shareholder value, and in light of the arguments posed by Keefe and Roush, we revisit the relationship between EVA and shareholder return and reexamine the evidence and issues surrounding the use of EVA as a tool for valuing investments. Using the Stern Stewart Fortune 1000 data, we examine two potential relationships for 33 food companies listed in the database. The first is between the absolute level of EVA in 2000 and 3-, 5-, and 10-year shareholder returns. The second is between 3-, 5-, and 10-year mean percentage changes EVA and 3-, 5-, and 10-year shareholder returns. The correlations found were extremely weak in all instances tested. [EconLit citations: 9120, 9320, M410, Q130]. © 2003 Wiley Periodicals, Inc. Agribusiness 19: 255-267, 2003.

Suggested Citation

  • David Sparling & Calum G. Turvey, 2003. "Further thoughts on the relationship between economic value added and stock market performance," Agribusiness, John Wiley & Sons, Ltd., vol. 19(2), pages 255-267.
  • Handle: RePEc:wly:agribz:v:19:y:2003:i:2:p:255-267
    DOI: 10.1002/agr.10054

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    References listed on IDEAS

    1. Calum G. Turvey & Linda Lake & Erna van Duren & David Sparling, 2000. "The relationship between economic value added and the stock market performance of agribusiness firms," Agribusiness, John Wiley & Sons, Ltd., vol. 16(4), pages 399-416.
    2. Turvey, Calum G., 2002. "Can Hysteresis And Real Options Explain The Farmland Valuation Puzzle?," Working Papers 34131, University of Guelph, Department of Food, Agricultural and Resource Economics.
    3. Robert T. Kleiman, 1999. "Some New Evidence On Eva Companies," Journal of Applied Corporate Finance, Morgan Stanley, vol. 12(2), pages 80-91.
    4. Gerald T. Garvey & Todd T. Milbourn, 2000. "EVA versus Earnings: Does it Matter which is More Highly Correlated with Stock Returns?," Claremont Colleges Working Papers 2000-52, Claremont Colleges.
    5. repec:bla:joares:v:38:y:2000:i::p:209-245 is not listed on IDEAS
    6. Biddle, Gary C. & Bowen, Robert M. & Wallace, James S., 1997. "Does EVA(R) beat earnings? Evidence on associations with stock returns and firm values," Journal of Accounting and Economics, Elsevier, vol. 24(3), pages 301-336, December.
    7. Stephen P. Keef & Melvin L. Roush, 2003. "The relationship between economic value added and stock market performance: A theoretical analysis," Agribusiness, John Wiley & Sons, Ltd., vol. 19(2), pages 245-253.
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    Cited by:

    1. Brandon Schaufele & David Sparling, 2011. "Regulation and the financial performance of Canadian agribusinesses," Agricultural Finance Review, Emerald Group Publishing, vol. 71(2), pages 201-217, August.
    2. repec:ags:ifaamr:269674 is not listed on IDEAS

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