The EVA Style of Investing

Shareholder value efficiency in European banking

“…Economic value added is one of the most widely adopted measure of shareholder value and various studies provide evidence that EVA is particularly useful in assessing shareholder value (such as Ferguson and Leistikow, 1998;Machuga et al, 2002;Adsera and Vinolas, 2003;Abate et al, 2004 andFerguson et al, 2005). In order to minimise heteroscedasticity and scale effects in our model, we standardise EVA bkg by capital invested so that this ratio expresses the shareholder value created for any euro of capital invested by shareholders in the bank.…”

Application of innovative company valuation methods in Latvia : analysis and possibilities for improvement

“…A. Abate et al (2004) stated that the EVA style of investing emphasizes the fundamentals of wealth creation in the profiling of a company and its stock. This can be used to aid investors in their decision to allocate funds between an actively managed and passive indexing approach depending on the degree of capital market efficiency.…”

Does EVA Beat ROA and ROE in Explaining the Stock Returns in Indian Scenario? An Evidence Using Mixed Effects Panel Data Regression Model

“…The empirical literature also claims that earnings generally dominate most other measures in explaining annual stock returns. However, the more recent literature suggested that earnings should not be relied upon, since they have little direct relationship to wealth creation (Abate, Grant, & Stewart III, 2004; Grant, 2003; Rappaport, 1981, 1986, 1998; Stern, Stewart III, & Chew, 1995; Stewart III, 1991). A study was done to analyse the financial performance of Dabur India Limited by using EVA and advocated EVA to be better than the traditional measures of corporate performance, such as net profit margin (NPM), operating profit margin (OPM), return on investment (ROI), return on net worth (RONW) and EPS, as they fail to identify the true surplus.…”