Economic Value Added or Earnings per Share? An Incremental Content Analysis
Journal Title: Empirical Economic Review - Year 2018, Vol 1, Issue 2
Abstract
The primary objective of the study is to determine the relative and incremental information content of Economic Value Added (EVA) as compared to the traditional accounting measure of Earnings per Share (EPS). The study employs the methodology derived from Easton and Harris (1991). The study sample comprises 30 largest listed non-financial firms on Pakistan Stock Exchange (PSX) and covers the period from 2005-2014. The findings indicate that EPS outperforms EVA in capturing the market trends of stock return performance. The results of the research negate the common notion of EVA as a superior measure of firm performance. Although, evidence obtained from empirical tests illustrates that EVA provides marginal incremental information combined with EPS, but it is low. The study offers academicians, practitioners, and investors a more accurate measure by which to assess performance in the markets.
Authors and Affiliations
Maham Ejaz, Rubeena Tashfeen, Kinza Younas, Abubaker Naeem
Keywords
Related Articles
- EP ID EP498720
- DOI 10.29145/eer/12/010204
- Views 123
- Downloads 0
Application of Financial Decisions, their Determinants, and Financial Performance: A Tabular Summary of Systematic Literature Review
Financial decisions (capital budgeting, capital structure and dividend policy) are the most important components of corporate finance and now a days have received the attention of researchers and practitioners. Financial...
Pakistan’s Electricity Demand Analysis 1975-2016
The problem of energy is one that has plagued the economic growth of Pakistan for decades; the resulting domestic pressure has often led to the misallocation of resources, and therefore should be studied extensively for...
Analyzing the Competitiveness of Zimbabwean Economy against its Neighbouring Countries
The purpose of this research is to analyze the impact on economic performance of competitiveness of Zimbabwean economy vis-à-vis its neighbouring countries, namely Botswana, Mozambique, South Africa and Zambia between 20...
Financial Variables as Predictive Indicators of the Luxembourg GDP Growth
The last financial crisis has had negative impacts on economic growth underlining the contagion between the financial sphere and the real sphere. Indeed, in many developed economies then aggregate production fell abruptl...
Globalization-Poverty Nexuses: Evidences from Cross-Country Analysis
The current study examines the impact of globalization on poverty across 119 countries by utilizing poverty headcount index based on 1.90$ international poverty line and KOF globalization index developed by Dreher, Gasto...