Performance Evaluation Using Accounting Variables (Net Profit and Operational Profit) and Economic Measures

Abstract

The paper seeks to examine the claim of economic measures advocate of their superiority as financial metrics compared with accounting measures. The paper uses a sample of public company accepted in Main market of Bursa Malaysia from 2001-2010, and will apply panel data regressions to test the relative information content of EVA, REVA, EVA Momentum and other accounting variables (NP and OP) and the incremental information content of EVA components in explaining market value added (MVA). The data will collect from Bursa Malaysia, Universiti Malaya (UM), and Universiti Tekonologi Malaysia (UTM). We will use historical and secondary financial data, and for testing the hypothesis will use cross-sectional time series data, ordinary least square (OLS), panel data regressions, multivariate regression, correlation coefficient, coefficient of determination using SPSS. This study is expected to clarify the relationship between accounting and economic measures with market value added as a company's performance, and it could help to public companies' owners/managers in their making decision and increasing their performance. In this article, the conceptual model is proposed.

Financial Performance Appraisal Using Economic Values Added in Emerging Markets: Evidence from Egyptian Listed Firms

“…On the other side, some studies didn't show any significance for EVA, REVA and EVA Momentum as economic value based techniques. As, Nakhaei et al (2012) argued that according to his study entitled "Performance Appraisal with Accounting and Value Based Measures" which had the purpose to investigate the public firms accepted in Main market of Bursa Malaysia starting from 2001 to 2010, no definite evidence was found supporting that EVA, REVA or even EVA momentum are associated with firms' financial performance. Ultimately, Ashraf (2018) investigated the significance of contemporary measures of firms' financial performance such as REVA and EVA and conventional accountingbased measures for the cement firms of Pakistan starting from 2006 to 2014.…”

“…In this investigation, a multiple regression model is used, as in the research models presented by Nakhaei et al (2012), Gupta & Sikarwar (2016) and Fayed & Dubey (2016). Thus, the following general equation is created as a statistical research model to analyze the impact of our independent variables on our dependent variable-corporate financial performance (ROA).…”

Is Economic Value Added Momentum (EVA Momentum) a Better Performance Measurement Tool? Evidence from Egyptian Listed Firms

“…In this investigation, a multiple regression model is used, as in Nakhaei et al (2012) and Khadafi & Heikal (2014). A stepwise regression analysis using the backward method is applied to be able to propose the optimum accounting technique(s) to be employed in improving a firm's financial performance.…”

“…First, from the research models presented in Nakhaei et al (2012), Gupta & Sikarwar (2016) and Fayed & Dubey (2016), we can create the following general equation as a research model to analyze the impact of our independent variables on our dependent variable-corporate financial performance (ROA and ROE):…”

Shareholder Value Creation - Comparison of Traditional Accounting Measures and EVA as Predictors of MVA

“…Alam and Nizamuddin (2012) emphasized on linking managers' compensation with value creation as it motivates managers to work for increasing shareholders' wealth. Nakhaei et al (2012) tried to provide a theoretical framework in regard to EVA and also compared it with other traditional performance measures.…”