Foundations of EVA™ for Investment Managers

Grant, James L.

doi:10.3905/jpm.1996.409573

Cited by 74 publications

(40 citation statements)

References 3 publications

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“…EVA it is an estimate of the amount by which earnings exceed or fall short of the rate of return shareholders and lenders could get by investing in other securities of comparable risk and includes a charge against profit for the cost of all the capital a company employs. Isa and Lo (2001), Stewart (1990), Lehn and Makhija (1996), Uyemura et al (1996), Milunovich and Tsuei (1996), Grant (1996) and Turvey et al (2000) carried out on what might be of superior metrics on evaluating firm performance, i.e. either EVA or conventional measures.…”

Section: Methodsmentioning

confidence: 99%

Economic value added (eva) as a performance measurement for glcs vs non-glcs: evidence from bursa malaysia

Ismail¹,

Fazilah²,

Hwa³

et al. 2008

Prague Economic Papers

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Ab stract:EVA is a use ful tool for as sess ing com pany per for mance. It com bines fac tors, such as econ omy, ac count ing and mar ket in for ma tion in its as sess ment. This study em ployed EVA in an at tempt to com pare the com pa nies' per for mances of GLCs (gov ern ment-linked com pa nies) and non-GLCs. Based on a 4-year pooled panel data of 37 GLCs and 208 non-GLCs, the re sults show that com pa nies with gov ern ment as their stake holders tend to ex hibit lower EVA scores than the com pa nies with out gov ern ment stake holders in Ma lay sia. Larger size com pa nies were found to have lower EVA val ues. Com pa nies which have both the char ac ter is tics -which are si mul ta neously large in size and gov ern ment-owned, tend to be most ad versely af fected. Thus, any in cre ment in the size of com pany for GLCs would de crease or de stroy the value of the com pany, and to a greater degree, than companies without government holding.

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Section: Methodsmentioning

confidence: 99%

Economic value added (eva) as a performance measurement for glcs vs non-glcs: evidence from bursa malaysia

Ismail¹,

Fazilah²,

Hwa³

et al. 2008

Prague Economic Papers

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“…Grant's analysis of relative EVA and relative capital invested Grant (1996Grant ( :44, 1997 studied the relationship between MVA divided by capital and EVA divided by capital for 983 companies selected from the Stern Stewart Performance 1000 for 1993 and 1994. The results for 1993 showed an overall r 2 of 32% for all the companies.…”

Section: 7mentioning

confidence: 99%

“…These findings revealed a high level of correlation between MVA and EVA for companies with a positive EVA, but low levels of correlation for companies with a negative EVA. Grant (1996) found that the real corporate profits should be measured relative to the amount of capital needed to generate that level of profitability. This insight led him to use standardised values for EVA and market value, instead of absolute values.…”

Section: 7mentioning

confidence: 99%

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EVA versus traditional accounting measures of performance as drivers of shareholder value – A comparative analysis

Wet

2005

Meditari Accountancy Research

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Several researchers and practitioners, notably Stern Stewart Consulting Company and Associates, have claimed that economic value added (EVA) is superior to traditional accounting measures in driving shareholder value. Other researchers have refuted these claims by supplying data in support of traditional accounting indicators such as earnings per share (EPS), dividends per share (DPS), return on assets (ROA) and return on equity (ROE). This study endeavoured to analyse the results of companies listed on the JSE Securities Exchange South Africa, using market value added (MVA) as a proxy for shareholder value. The findings do not support the purported superiority of EVA. The results suggest stronger relationships between MVA and cash flow from operations. The study also found very little correlation between MVA and EPS, or between MVA and DPS, concluding that the credibility of share valuations based on earnings or dividends must be questioned.

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“…Segundo os resultados, o EVA® explica 31% do valor de mercado e 55% quando se utiliza séries defasadas (EVA®t 1 -EVA®t 0 ). Grant (1996) …”

Section: Estudos Similaresunclassified

Ausência de Correlação Positiva entre Retorno da Ação e Desempenho Econômico EVA® das Empresas do IBrX-50 da BOVESPA

Chaves¹,

Vellani²,

Pimenta³

2012

RAIMED

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ResumoEste trabalho analisa a relação ente desempenho econômico EVA® (Economic Valued Added) e retorno da ação. Segundo a lógica das finanças, espera-se uma correlação positiva entre as variáveis. Surge então, a seguinte questão de pesquisa: com base em dados trimestrais entre 31-03-1998 e 30-09-2006, há correlação entre retorno da ação e EVA® das empresas não financeiras listadas no índice do IBrX-50 da BOVESPA? Calculam-se as variáveis por meio de dados coletados na Economatica®. Retorno da ação representa a divisão entre valor da ação em t1/ valor da ação em t0 menos 1 e multiplicado por 100. Como proxy para desempenho econômico, utiliza--se o EVA® calculado pela metodologia contida em Assaf Neto (2003). Os resultados apontam presença de correlação em somente uma empresa, e ainda negativa, entre o retorno da ação e o EVA® (valores percentuais). Quando se utiliza a variação do EVA® (valores nominais), os resultados indicam correlação negativa em 17 (61%) empresas. Esse resultado está distante da lógica das finanças. No entanto, há limitações que podem alterar os números. As proxy podem criar distorções. Por isso, sugerem-se novos estudos com outras medidas de desempenho econômi-cos, períodos e empresas.Palavras-Chave: EVA® (Economic Valued Added); Retorno da Ação.

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Foundations of EVA™ for Investment Managers

Cited by 74 publications

References 3 publications

Economic value added (eva) as a performance measurement for glcs vs non-glcs: evidence from bursa malaysia

Economic value added (eva) as a performance measurement for glcs vs non-glcs: evidence from bursa malaysia

EVA versus traditional accounting measures of performance as drivers of shareholder value – A comparative analysis

Ausência de Correlação Positiva entre Retorno da Ação e Desempenho Econômico EVA® das Empresas do IBrX-50 da BOVESPA

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