Contemporaneous relationship between Eva and shareholder value

This paper investigates the assertions that EVA is more highly associated with shareholder wealth and firm values than are traditional performance measures. Two commonly used value-based performance metrics namely, Total Shareholder Return (TSR) and Tobin's Q were also considered to highlight the value-relevance of EVA vis-a-vis these measures in predicting shareholder wealth. Using a panel sample of about 1000 American firms over the period 1990 2002, the study found compelling evidence consistent with the notion that EVA outperforms other traditional performance measures in explaining shareholder wealth. Value-relevance tests reveal EVA to be more highly associated with shareholder wealth than TSR and Tobin's Q. The incremental value-relevance tests have also suggested that EVA possesses the largest explanatory power over TSR and Tobin's Q. These results conclusively support the claims made by EVA proponents and further support the potential usefulness of EVA metric for internal and external performance measurement.
Keywords No keywords specified (fix it)
Categories (categorize this paper)
DOI 10.1504/IJBGE.2006.011157
Edit this record
Mark as duplicate
Export citation
Find it on Scholar
Request removal from index
Revision history

Download options

Our Archive

Upload a copy of this paper     Check publisher's policy     Papers currently archived: 41,608
External links

Setup an account with your affiliations in order to access resources via your University's proxy server
Configure custom proxy (use this if your affiliation does not provide a proxy)
Through your library

References found in this work BETA

No references found.

Add more references

Citations of this work BETA

No citations found.

Add more citations

Similar books and articles


Added to PP index

Total views
33 ( #247,648 of 2,249,304 )

Recent downloads (6 months)
1 ( #1,031,023 of 2,249,304 )

How can I increase my downloads?


My notes

Sign in to use this feature