This study was made to examine the relationship between Economic Value Added (EVA®) and Market Value Added (MVA) with the reported earnings. Thus, the purpose is to gain better understanding in the use of EVA and MVA in relation to the reported earnings in certain purposes from different regression models. With the sample of 40 Indonesian listed companies in Indonesia Stock Exchange from year 2004 to 2007, the hypothesis testing is used to find the relationships among variables. The author use formula for calculating EVA and MVA to be use in four models of regression analysis against reported earnings. This study found evidence in the relationships between EVA and MVA with reported earnings, and the highest correlation among the models is relationship within the same year period, which can be used for evaluation purposes. Only the relationship of the EVA in the previous year and reported earnings changes is proved not significant. Still, MVA is more significant in explaining its relationship with reported earnings rather than EVA. The author concludes that in general, Indonesian listed companies still produces negative EVA. On the other hand, while the EVA and MVA are proved to have correlation with reported earnings, the result for EVA is lower than MVA. Therefore, there is still not enough evidence that EVA can be used to explain the reported earnings effectively other than MVA.

/pdf/the-relationship-between-economic-value-added-eva-and-market-4acdzxstuv.pdf

The relationship between economic value added (eva ® ) and market value added (mva) with reported earnings: an empirical research of 40 listed companies in indonesia stock exchange for the year 2004-2007

The lack of satisfaction about using the traditional performance assessment has resulted in presenting several suggestions about new performance assessment criteria. Economic value added is one of the most important items among these criteria. In this research the superiority of economic value added as an economic criterion of performance assessment, was tested in comparison with other accounting performance assessment criteria. Our sample involves 120 companies accepted in Tehran Stock Exchange during the time period between the years 2003 and 2010. We have used panel regression to test the relative data content of economic value added and other accounting criteria and also to test differential (growing) data content of economic value added elements. The results of testing the research hypotheses showed that accounting profit (net profit and net operational profit after taxation) has more data content to describe the traits of stock return compared to economic value added and operational cash flows. The promissory goods and operational cash flows also have differential (growing) data content compared to other economic value added elements in describing the traits of stock return.

http://www.aessweb.com/pdf-files/29-37.pdf

Relative and differential information content of economic value added, earnings, operating cash flow and stock return

The purpose of this study is to examine the effect of capital structure (debt to asset ratio and debt to equity ratio), economic value added, and coal reserves towards Tobin’s Q, as a proxy of firms’ value, of coal companies listed on the Indonesia Stock Exchange (IDX). This study also aims to examine the contribution of Tobin’s Q towards sectoral stock index price of coal production companies. From a total population of 23 companies, this study took a sample of 16 coal production companies using purposive sampling method. The data used is collected from the companies audited financial statements and annual reports in IDX’s website from 2009 to 2014. The results of multiple linear regression analysis show that there is significant impact of economic value added, coal reserves and profitability dummy towards Tobin’s Q. Furthermore, the results of linear regression analysis show that there is significant impact of Tobin’s Q towards sectoral stock index price of coal production companies. Based on the results of this study, the financial decision makers in coal production companies are advised to use economic value added, availability of coal reserves and profitability in improving firm value reflected in its share price. Keywords: capital structure, coal reserves, economic value added, Tobin’s Q

/pdf/factors-affecting-tobin-s-q-coal-mining-company-registered-cni9786tsl.pdf

Factors affecting tobin's q coal mining company registered in indonesia stock exchange

There are two types of premises of residual income utilization: internal and 
external. The internal function of residual income is to make managers make 
investment choices in a way that is governed by the non-negative NPV 
maximization rule ensuring firm owners’ wealth maximization. Efficacy of 
residual income in the field is measured by its decision-relevance (decisional 
goal-congruity). The external function of residual income is to convey 
information that helps investors to assess a firm’s future prospects and to 
make informed investment decisions. The efficacy of residual income in the 
field is measured by its value-relevance (measuring goal-congruity). The 
paper examines both roles of residual income and outlines research method 
that was used in value-relevance study of the metric.

Residual income: the essence, history and premises of utilization

In this article a study has been made to analyse empirically the relationship between Economic Value Added (EVA) based ranking and traditional performance indicator (namely, liquidity, profitability and efficiency ratios) based ranking. For this purpose, EVA of the select NSE listed automobile companies is calculated by making some necessary adjustments. It is observed that no single index can be formed with the help of traditional ratios. In this study, it has been found that profitability and efficiency ratios are positively correlated with the EVA, but liquidity has no impact on EVA. These findings establish that rankings based on EVA and rankings based on traditional measures (profitability and efficiency) are nearly the same.

http://inet.vidyasagar.ac.in:8080/jspui/bitstream/123456789/1009/2/Arindam%20Das.pdf

Eva tm and traditional financial measure of business performance: a study on nse listed automobile companies

The correlation between economic value added and the market value of companies

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The correlation between economic value added and the market value of companies