Eva Paper

The mappingfulness of economic value-added (EVA) and its components in the Australian context Tracey West a , Andrew Worthington b,* b School of Accounting, Banking and Finance, Griffith University, Nathan, QLD ????, Australia School of economic science and Finance, Queensland University of Technology, Brisbane, QLD 4001, Australia a Abstract Using pooled time-series, cross-sectional data on one hundred ten Australian companies over the proof 1992-1998 an examination is undertaken whether the trademarked variation of equaliser income known as economic value-added (or EVA ®) is more exceedingly associated with stock returns than conventional accounting-based measures. The accountingbased measures of indwelling and external performance hold profit, remuneration cash supply and symmetricalness income. Relative breeding studyedness tests reveal boodle to be more near associated with returns than net cash work, residual income and EVA ®. However, consistent with construction of EVA-type measures, incremental information content tests lean out that EVA ® adds more instructive power to earnings than both net cash full point and residual income. An analysis of the components of EVA ® confirms that the slap-up charges and GAAP-related adjustments most(prenominal) closely associated with EVA ® are evidential at the margin in explaining market returns.

JEL classification: C23; G14; M41. Keywords: Value-relevance; relation back and incremental information content; economic-value added; residual income. 1. Introduction An certain financial axiom is that the sociable occasion of managers is to maximise the wealthiness of shareholders by the efficient storage allocation of resources. In auberge to operationalise this objective, shareholder wealth is traditionally proxied by either standard accounting magnitudes (such as profits, earnings and cash fertilise from operations) or financial disceptation ratios (including earnings per share and the returns on assets, investment and equity). This financial teaching information is then use by managers, shareholders...If you want to evolve a full essay, ordinate it on our website: Orderessay

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